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

This paper analyses the impact of an Indonesian scholarship programme, 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 decentralized design, involving both geographic and individual targeting. The identification strategy exploits this decentralized structure, relying on instrumental variables constructed from regional mistargeting at the initial phase of allocation. The programme 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 utilization of child labour. Copyright 2007 Blackwell Publishing Ltd.