INDONESIAN UNDERGRADUATE ECONOMIC REVIEW

Volume 2 Issues 1 No.2 (7 pages)

Factors of Socio-economics of College Student: Case from Indonesia

Sena Farid Sudarsono1, Putri Riswani Halim2

Universitas Padjadjaran-Bandung, West Java, Indonesia
senafarid@gmail.com1, utiriswani@gmail.com2

Accepted : October 28, 2016

Indonesian Undergraduate Economic Review 2016

ABSTRACT

INTRODUCTION

Through this article, the authors would estimate the

determinant of an individual and household
background to get into college. This article uses
Indonesian Family Life Survey (IFLS) 5 year 2014.
The samples used are individuals which currently
attend college and do not attend college but at the
same age range (17-24 years old). Using the
probability model, this paper uses logit model with
dummy dependent variable (1=college student,
0=not college student) while the independent
variables are individual character, sociodemographics, parent characteristics, and household
characteristics. From first model that include 1624
samples used in cross section data from IFLS 5, the
estimation shows that independent variables;
household income, household assets, parent
education, urban area, and female have a positive
correlation towards higher probability to enter
college statistically significant. The additional
variables show that student hold SMA, MA, and
SMK graduate as well as public school student have
higher probability into college. These findings
suggest policy makers to decrease inequality of
opportunity to enter college.

Indonesia experiences high economic growth more

than any developing countries. While some
countries are having higher inflation, recession,
even near depression, Indonesia succeeded to
improve social welfare year by year which can be
seen by decreasing poverty level. Other than that,
Indonesia goes through demographic bonus during
year 2020-2030. It means productive age residents
in Indonesia exceeds the unproductive ones. This
will give positive impact on Indonesias economy.
More and more number of residents who are
productive in their jobs will increase income. Higher
income means higher welfare. Nevertheless,
recently, Indonesias economy has a deceleration.

Keywords: higher education, college, IFLS,

inequality of opportunity.

This deceleration is caused by some factors

which lead to lower income per capita. Inequality of
economy becomes the biggest contributor of the
deceleration. Inequality causes the high economic
growth didnt spread equally to all the residents. The
richer households will consume more because they
undergo the economic growth while the poorer
households have to lower their consumption because
they faced botheration. This circumstance shows
that in Indonesia trickle-down effect did not occur.
This effect explains, in Indonesia, that a growth in
economy does not impact the whole welfare of state,
especially for the poor.

JEL Code: A2, I20, I21, I24

The magnitude of this inequality can be seen
from figure of Indonesian Gini Index. The average
of Indonesian Gini ratio from year to year has kept
on increasing. In March 2016, the gini ratio reached
0.397 (Badan Pusat Statistik, 2016). This number

Published online : November 14, 2016 (Vol.2 Issues1)

indicates that the condition of economy in

Indonesia is absolutely inequal. The dimensions of
this inequality are seen from consumption. The
level
of consumption
of the
residents is
One
of
them
is education.
Higher education produces higher income (Tarigan,
Robinson: 2006). In the last ten years, the numbers

certainly based on the rate of their incomes while

the income level of an individual is influenced
by several factors.
of net enrollment of higher education in Indonesia
has relatively moved positive from 8.87% to 17.34%
(Badan Pusat Statistik, 2016).

Figure I.1. Net Enrollment Ratio of College in Indonesia (%)

25,00%

Percentation college student (%)

20,18%
18,08%

20,00%
15,00%
10,00%

8,87% 9,64%

10,07% 10,30% 11,01%

17,34%

12,56% 13,48%

5,00%
0,00%
2006

2007

2008

2009

2010 2011
Years

2012

2013

2014

2015

Source: Badan Pusat Statistik, 2016

However, this number still indicates there is an
equality of opportunity. Poor households still
experiences inequality of access because they do not
have enough money to obtain higher education.
Moreover, poor households tend to live in rural areas
which in that areas have no qualified teachers and
high school which leads to lack of their interest to
continue their study to college. Besides that,

personal backgrounds, like household asset, parent

education background, and even gender, are
strongly believed affecting individual chance to
enter university. According to Center for Economics
and Development Studies University of Padjadjaran,
inequality reaches 29% between 1st quantile which
is the 20% of poorest households and 5 th quantile
which is the 20% of richest households in 2012.

Figure I.2. Inequality of Net Enrollment between quantile 5 and quantile 1

in Indonesia (%)

40,00%
35,00%

Inequality level (%)

30,00%

28,00%

27,00%

29,00%

28,50%

30,00%

29,00%

24,00%

25,00%
20,00%
15,00%
10,00%
5,00%

0,00%
Source: Keberpihakan.org (Center for Economics and Development Unpad)
2006
2007
2008
2009
2010
2011
Years

2012

Through this paper, authors would see the socioeconomics factors and measure the probability of
individuals to obtain higher education. This
motivation invites a question from authors, what are
actually the factors that affecting the rate of
participation in higher education in Indonesia?
Authors hypothesize that household income,
household asset, parents education background,
urban or rural school, and gender have impacts to
individuals to acquire higher education.
This paper proceeds in the following direction.
In the next section will be about previous findings
about factors that may affect individual to have
higher education. In the third section sets a model,
kind of data, and data analyze tools. The fourth
section presents result and discussions of author
estimates, while the final section summarizes and
concludes the discussion
LITERATURE REVIEW
1.

Household income

Household income closely related to equality of

opportunity, family welfare, and fairness in society.
Poorer household tends to lack of opportunity in
educational attainment, professional occupation,
health and public services compared to richer one.
Obtaining higher education can be a way out of this
poverty cycle but to get into university requires a lot
of money. According to Blenden, et all, 2002:1,
increase in educational inequality linked to family
income. So, there is tendency that chance to get the
higher level of education, especially college,
depends on household wealth. This fact leads to a
question whether government should subsidise the
poor families in order to improve their living
standards.
According to Central Bureau of Statistics which
is known as BadanPusatStatistik (BPS) year 2015,
there are only 17% which really get into college in
Indonesia. Although the participation rate in higher
education is lower than primary and secondary
education rates, the rate of enrolment is still higher
than other countries such as India, Vietnam, and
Pakistan (Sanyal, 2006).

2.

Household Assets

Assets can have multidimensional effects on

household and individual well-being. Findings
suggest that assets are a strong determinant of child
educational outcomes (Deng et al. 2014; Chowa et
al. 2013; Huang 2013), but much of the existing
literature views the effect of assets as primarily
operating through wealth effects.
Changes in asset holdings that parents have may
affect children education. Agricultural assets might
raise the returns to child labor which discourages
education investment, while other assets could gain
the effective time to study (e.g. electricity, bicycle,
and close source of water) and increase return to
schooling. If owning an asset increases the returns to
child labor and therefore the opportunity cost of
schooling, then an asset transfer could encourage
parents to pull their children out of school for
household or farm activities (Kafle, K, et al, 2014).
The opportunity cost of schooling is high when
assets are complements to child labor.
For agrarian households, agricultural assets are
complementary to child labor and may increase the
opportunity cost of schooling. In contrast, assets like
household durables and improved housing
structures do not complement child labor and may in
fact improve educational outcomes. (Kafle, K, et al,
2014)
3. Parents Education
Parents have a big impact on their children
education. One of the reason is because individuals
with educated parents would be motivated to achive
higher education because their parents have shown
the way how to be a succesful person. Existing
research shows that parents with personal educated
background and good literacy strongly affect the
education of their children. Parents who have gone
beyond a high school education are found to be more
involved with their infants and children than those
who did not finish high school (Sclafani, 2004).
John and Chiara (2010: 20) with their research
about link of parents education and children
education attainment stated that an additional year
of either mothers or fathers education increases
their children education by as little as about onetenth of a year. They also found that effect of
mothers education is larger for daughters than sons.

4. Urban and rural schools

Where the school took place is strongly believed
affecting the quality of education individuals get.
There are two big types of place of school, urban and
rural schools, where society considers urban schools
benefit more than the rural schools. Urban schools
can provide a good service of education because
they have good quality of teachers. Teachers who
lesson in urban schools are already qualified because
they passed a test which requires some
qualifications. Furthermore, urban teachers mostly
fully supported by government, like a higher salary,
which leads to the long sustainability of teaching. In
addition, the infrastructure of urban schools support
students to study effectively (Adkins, 1968). So,
inviduals who graduated from urban high schools
have a higher opportunity to get into university
because they receive better facilities than the rural
one.
5. Gender
Gender differences in higher education have become
more popular in every academic or non-formal
discussion. Studies found that female students now
outnumber male students and outperform
academically (Baker &Valez, 1996; Busch, 1995).
Moreover, female now dominate field study that
previously only taken by male, while male students
still continue to choose the traditional choices
(Ayalon, 2003). According to Anastasia, Tremblay,
Makela and Drennen (1999), of the seven aspects,
females perform higher in six aspects than male:
awareness of career opportunities; career
counseling; graduating on time; opportunities to
mature; graduate assistants who clearly presented
class materials; and professor assistance outside of
class.
All these findings show that female students
utilize the university services and make a great value
of higher education more than male students. An
explanation for this distinction could be a paradigm
that women obtain lower salaries and less
prestigious positions than men (Farmer, Wardrop, &
Rotella, 1999). In order to equal men in salaries and
job, women need to educate theirselves more and
outperform male academically. (Gammie et al.,
2003).

RESEARCH METHODOLOGY
1. Methodology
Present article explore further and try to see the
factors of probability of being college student by
exploring the household and individual determinant.
The specification of econometric model can be
written as:
= ( , )
Where, is the latent dependent variable
that has the binary code. Which is 1 means that
individual i are the college student in 2014. While 0
means that individual i are not attending college in
2014. are the vector variables that included
household and individual characteristics such as
household size, age, sex, expenditure, household
asset, parent education, urban, and school type.
While is the error term. This research use probit
model to analyze the probability of being college
student in the particular age. Because the coefficient
from probit model can not be interpreted, so that
later we calculate the marginal effect to get the
number of probability.
2.

Data

This study explore the rich data survey conduct by

RAND. The data is Indonesian Family Life Survey
(IFLS). The Indonesian Family Life Survey (IFLS)
is an on-going longitudinal survey in Indonesia. The
sample is representative of about 83% of the
Indonesian population and contains over 30,000
individuals living in 13 of the 27 provinces in the
country.
Samples used in the estimation are 1624
individuals with age range 17-24 years old. In that
number of samples, 21% from samples are currently
studying in college, including diploma and bachelor.
Not surprisingly, only 2% of total samples that are
poor households.
RESULT
The following table is the result from the model. The
sign of coefficient means that if the variables have
the positive sign so that the individual have the
increase of probability of being college student, vice
versa. Total sample included in estimation are about
1624 individuals that have age between 17 to
24years old.

Marginal
Effect

Dependent: College=1, No college=0

Coefficient

Household size

0.1781*

Household size2

-0.0146

Log of per capita expenditure

0.5166***

0.1232

Log of household asset

0.1101***

0.0263

Urban

0.2171**

0.0496

Poor status

0.0930

0.0232

Age

-0.1188***

Female

0.1235

0.0293

Senior high school: SMA

1.3045***

0.3358

Senior high school: SMK

0.7601*

0.1910

Senior high school: MA

1.4048***

0.4705

Senior high school type: Public

0.8328**

0.1930

Senior high school type: Private

0.5721

0.1397

Parents education: Elementary

0.2186

0.0547

Parents education: Junior high school

0.4336

0.1183

Parents education: Senior high school

0.3785

0.0937

Parents education: College degree

1.3101***

0.4338

Parents education: Other school

0.1444

0.0369

_cons

-10.5247***

Number of obseravation
* p<0.1, ** p<0.05, *** p<0.001

1624

From the result, we can see several factors that

have the significant effect to increase probability of
being a college student. We get the positive sign on
the household size with 10% significant level. It get
a bit tricky to interpreted because this variable is
reject our hypothesis. We have the intuition that the
larger household size would negatively related to
probability of individual to get the college school.
Because the parents with the larger household size
condition would face the trade off when they have to
invest their money for children education.
We found that per capita expenditure and
household asset have the positive effect and
statistically significant at 1%. This findings
emphasize previous literature that wealth, like
household durables and other assets, encourages
individual to study have a significant effect towards
higher probability to enter college. In other
condition, Individuals living in the urban has the
bigger probability to continue their study to
university. This corresponds with prior research that
urban school has better facilities and qualified
teachers than the rural school.

0.0425
-0.0035

-0.0283

Poor status is the dummy variable, which 1 is the

poor and 0 is non poor. This variable have
insignificant effect. In contrast to poor status
variable, age variable is significant at 1%. The
negative sign indicates that older individual has
decreased the probability.
In gender variable, phenomenon in Indonesia
controverts previous literature. It gets statistically
no significant. Interestingly, three variables of
senior high school (SMA, MA, SMK) have the
positive impact and statistically significant. It means
there is no significant differences between any of
different initial school before going to college.
However, in school type, only the public senior high
school has the significant effect. It may represents
about superiority of public school in Indonesia. In
this model, we use the head of households
education as a proxy to explain the parent education,
and not surprisingly, the head of households
education only has significant result on college
degree variable. This imply that the household with
college degree parent tend to get their children into
college, ceteris paribus.

Authors do not mean that this result would

predict perfectly the probability of being the college
student, but authors prefer to see the individual
background that get the college education. Authors
consider several factors that significantly related. It
means that the independent variables included in the
model are the initial condition. That condition might
be considered as the circumstances that affected the
probability of being college student. So that, rather
to see the causality, authors suggest to see the
background pattern that an individual has.
CONCLUSION
The result of this paper have some implications.
First, per capita expenditure and household assets
have the positive and statistically significant effect
determine the probability to enter the college. This
result shows us that wealth is essential factor that
determine the probability of being college student.
Second, individuals living in the urban has the
bigger probability to continue their study to
university. This corresponds with previous research
that urban school has better facilities and qualified
teachers than the rural school. Third, parent
educational level determines their children
education. The higher education parents obtained,
the higher their children education. The last,
students that hold SMA, MA, and SMK graduate
have higher probability into college.
This paper still has boundaries which only
consider the family background and individual
characteristic. Authors suggest for further research
to see the direct factors affecting the probability of
being a college student.
Authors suggest policy makers to decrease
inequality of opportunity to enter college by putting
more money for the pro-poor programs, such as
scholarship programs and school subsidies, as well
as the equalization of qualified teachers and
construction of new school/university in remote
areas.
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APPENDIX
1. Summary of Statistics

Variable

Obs

Mean

Std. Dev.

Min

Max

Household size
Household size2
Log of per capita expenditure
Log of household asset
Per capita expenditure
Household asset
Urban
Poor status
Age
Female
Senior high school: SMA
Senior high school: SMK
Senior high school: MA
Senior high school type: Public
Senior high school type: Private
Parent education: Elementary
Parent education: Junior high
school
Parent education: Senior high
school
Parent education: College
degree
Parent education: Other school

1764
1764
1626
1761
1626
1764
1764
1764
1764
1764
1764
1764
1764
1764
1764
1764

4.37
23.62
13.83
18.01
1314585.00
183000000.00
0.70
0.02
20.70
0.53
0.43
0.43
0.11
0.54
0.46
0.27

2.12
22.58
0.68
1.67
1322959.00
291000000.00
0.46
0.13
2.07
0.50
0.50
0.50
0.32
0.50
0.50
0.45

1
1
12
5
158604
0
0
0
17
0
0
0
0
0
0
0

13
169
17
22
22800000
3950000000
1
1
24
1
1
1
1
1
1
1

1764

0.17

0.37

1764

0.40

0.49

1764
1764

0.13
0.01

0.33
0.07

0
0

1
1