Working Paper: May 2001

The Chronic Poor, The Transient Poor, And the Vulnerable in Indonesia
Before and After the Crisis

Asep Suryahadi, Sudarno Sumarto*

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Abstract

Using cross-section data from household surveys, we estimate several categories of household poverty and vulnerability in Indonesia by combining the available information on current consumption levels, estimates of vulnerability to poverty, and estimates of expected consumption levels. The results indicate that the level of vulnerability to poverty among Indonesian households after the crisis unambiguously increased from pre-crisis levels. Furthermore, not only did the poverty rate in Indonesia increase significantly because of the crisis, but also much of this increase was due to an increase in chronic poverty. Likewise, the number of households that have high vulnerability to poverty has almost tripled. As a result, the total number of households in the vulnerable category has jumped from 18 percent of the population in 1996 to more than one third of the population in 1999.

*We thank Shubham Chauduri and John Maxwell for valuable comments and suggestions and Daniel Perwira and Wenefrida Widyanti for excellent research assistance. We are grateful to Statistics Indonesia (BPS) for providing access to the data.

Table of Contents

I. Introduction
II. Methodology
2.1. Method for Estimating Vulnerability
2.2. Poverty and Vulnerability Categories
2.3. Measurement Error
III. Data
IV. Results of Estimation
4.1. The Poor and the Vulnerable at the National Level
4.2. The Poor and the Vulnerable across Regions
4.3. The Poor and the Vulnerable across Urban and Rural Areas
4.4. The Poor and the Vulnerable across Sectors
4.5. The Poor and the Vulnerable across Educational Level
4.6. The Poor and the Vulnerable across Gender
V. Conclusion
References
Appendix