Fiscal Equity for Children in Indonesia: Research report

Public spending is essential to realise children’s rights, including to education, health care, and protection from violence, among others. Public finance decisions and fiscal policies do not impact all children equally: how much a child benefits from public services may vary, for instance, with availability or accessibility and cost and affordability of publicly provided health services for families in different income groups.

Fiscal incidence analyses are a powerful analytical tool to understand poverty and the distributional effects of fiscal policies. While most studies focus on the general population and the services they have access to, a new methodology allows us to better understand the impact of fiscal policies on poverty and inequality specifically for children. This is the first time such a child-focused analysis has been conducted in Indonesia, and our findings complement four child relevant incidence analyses in other low- and middle-income countries.

The study uses data from the Indonesian National Socioeconomic Survey (SUSENAS 2017) on household’s public services use, tax burden, and income as well as budgetary information on public spending, revenues, and fiscal policies. We include measures of multidimensional child poverty (children experiencing material deprivations in basic child rights) and monetary poverty (children living in households below the national poverty line).