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Citation Information

Type Working Paper - Department of Economics, Padjadjaran University
Title School choice and earnings: A case of Indonesia
Publication (Day/Month/Year) 2009
URL http://www.equitablepolicy.org/wpaper/200914.pdf
Public schools in Indonesia are widely perceived have better inputs and to be superior
to private schools. Public schools also benefit advantages of high-scoring peer effect as
entry to some junior secondary public schools in urban area is based on national score
test in elementary school. In this paper, I attempt to confirm the perception of superiority
of public school in Indonesia by comparing the yearly earnings of four types of schools
group; Public, Private Secular, Private Islam, and Private Christian. I use a large-scale
longitudinal observation of individual and household level on socioeconomic and health
survey, Indonesia Family Life Survey (IFLS) 2000 to estimate the effectiveness junior sec-
ondary education in Indonesia. To correct for sample selection bias, I use the two-step
method proposed by Bourguignon et al. As a result of insignificant all selectivity bias
coefficients, I use the OLS estimation to calculate the earnings decompositions. The in-
significant selection bias coefficients suggest that the OLS estimation is unbiased. I use the
Blinder-Oaxaca decomposition with Reimers’ decomposition technique to estimate earn-
ing differential between public and three types of private school graduates. The results of
earnings decomposition from OLS estimation, suggest that earning of people who grad-
uate from public school are 25 per cent and 35.2 per cent higher than their counterparts
from private nonreligious and private Islam. On the other hand, student who schooled at
private Christian school enjoys 0.28 per cents higher earnings that public.

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