Child wellbeing and economic development: evidence from Indonesia

Abstract

Ensuring a high quality of life for all children is essential for the future human and social capital as well as for sustainable economic growth and development. Hence, child wellbeing has gained much attention in recent years and has also been the ultimate focus of the Sustainable Development Goals. In this context, this thesis primarily focuses on the mental and emotional wellbeing of children, an important but often overlooked aspect of overall child wellbeing. Specifically, the thesis investigates whether harmful practices such as child labour and child marriage can have an impact on children’s mental health, issues that remain largely unexplored in the current economics literature. Additionally, the thesis provides empirical evidence on the effectiveness of a social protection program in addressing such issues and ensuring child wellbeing. The thesis consists of three main chapters that examine three questions on child wellbeing, using longitudinal household data from the Indonesia Family Life Survey (IFLS). First, the thesis examines the impact of early marriage on the mental health of girls in Indonesia. Employing several identification strategies such as fixed effects, coarsened exact matching (CEM) combined with difference-in-differences and instrumental variable approach, this chapter seeks to assess the causal effect between an early marriage of a woman and her mental health status later in life. The results reveal that early marriage has a significant effect on women’s mental health status. More specifically, women who marry early (i.e. by the age of 18 years) are more likely to be depressed as well as affected by severe depressive symptoms. Additionally, it is also found that a one-year delay in marriage decreases the probability of having severe depression. These findings are robust to a variety of sensitivity checks. Second, the thesis investigates the long-term effect of child labour on adolescent mental health. To address the potential endogeneity bias of child work, two instruments - minimum wage and the number of family-owned businesses by the household are employed. Considering the nature of the main outcome variable of interest – the mental health score, this study applies an IV-Poisson model to estimate the effect of child work on mental health. The results reveal that child labour has a substantial negative impact on a child’s long-term mental health status. Moreover, we find heterogeneity in the effect of child labour where working as a child for wages increases the mental health score, leading to depressive symptoms. On the contrary, there is no significant impact of working as a child in family enterprises on adolescent mental health. This study further shows that religiosity and social capital can play a role in mediating the adverse long-term effects of child labour on mental health. Finally, the thesis evaluates the impact of one of the largest subsidised food programs known as ‘Raskin’ (or rice for the poor) in Indonesia on the labour supply and schooling of children. The main identification issue arises from selection bias due to non-random distribution of the subsidy and unobserved heterogeneity. To address this, coarsened exact matching (CEM) with the difference-in-differences (DD) estimator is implemented. Given that engaging in labour market activities and attending school is a joint decision competing for the child’s time, the study uses a bivariate probit model with a matched double-difference approach to estimate the effect of Raskin on the likelihood of child labour supply and school attendance. The results reveal that the subsidised rice program in Indonesia is effective in decreasing the probability of working for boys though there is no impact on the outcomes of girls. Specifically, it is found that the Raskin program significantly reduces the likelihood of working for boys who engage in both working and schooling. These findings provide an important policy implication on how social protection tools can indirectly influence the wellbeing of children.