Educational mobility across multiple generations in Indonesia

Highlights

• Multigenerational dynamics differ between developing and developed countries.
• Income vs. endowment effects determine sign of “grandparent coefficient” in the Becker-Tomes model.
• In Indonesia, the grandparent coefficient is negative, unlike in high-income countries.
• Credit constraints during the 1997–98 Asian crisis push the coefficient more negative.
• Family-based assortative matching amplifies multigenerational persistence.

Abstract

Standard intergenerational measures have been shown to understate the long-run persistence of socioeconomic advantages in developed countries. We study theoretically and empirically whether this pattern extends to less developed settings, using Indonesia as a case study. Using the Indonesian Family Life Survey (IFLS) and Census data, we study multigenerational correlations in education across three generations. Contrary to previous findings, we observe greater multigenerational mobility than parent–child correlations alone would suggest. We develop a theoretical framework to highlight two key factors influencing multigenerational dynamics in developing countries: (1) financial and credit constraints, and (2) cultural norms related to marital sorting. To confirm their relevance, we exploit regional variations in exposure to the 1997-98 Asian financial crisis and in marital customs.