Protecting Education for the Poor in Times of Crisis: An Evaluation of a Scholarship Program in Indonesia

This paper analyses the impact of an Indonesian scholarship program, which was implemented in 1998 to preserve access to education for the poor during the economic crisis. Scholarships were targeted pro-poor and the allocation process followed a decentralised design, involving both geographic and individual targeting. The identification strategy exploits this decentralised structure, relying on instrumental variables constructed from regional mis-targeting at the initial phase of allocation. The program has increased enrolment, especially for primary school aged children from poor rural households. Moreover, the scholarships seem to have assisted households in smoothing consumption during the crisis, relieving pressure on households' investments in education and utilisation of child labour.