Volume 20 - Article 26 | Pages 623–656  

Does fertility decrease household consumption?: An analysis of poverty dynamics and fertility in Indonesia

By Jungho Kim, Henriette Engelhardt, Alexia Prskawetz, Arnstein Aassve

Abstract

This paper presents an empirical analysis of the relationship between fertility and a direct measure of poverty for Indonesia, a country, which has experienced unprecedented economic growth and sharp fertility declines over recent decades. It focuses on illustrating the sensitivity of the effect of fertility on household consumption with respect to the equivalence scale by applying the propensity score matching method. The analysis suggests that a newborn child decreases household consumption per person by 20 percent within four years. When the estimates of equivalence scales implied by the Indonesian sample are applied, the effect of a child on household consumption is still negative, but the magnitudes are in the range from 20 to 65 percent of that found with the per-capita expenditure as a measure of consumption. Therefore, it is suggested that the analysis based on the conventional measure of poverty is likely to exaggerate the effect of fertility on poverty at least because of the neglect of the proper equivalence scale.

Author’s Affiliation

• Jungho Kim - Korea Development Institute (KDI), Korea, Republic of EMAIL
• Henriette Engelhardt - Otto-Friedrich-Universität Bamberg, Germany EMAIL
• Alexia Prskawetz - Wittgenstein Centre for Demography and Global Human Capital (IIASA, OeAW, University of Vienna), Austria EMAIL
• Arnstein Aassve - Università Bocconi, Italy EMAIL

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