The Impact of Decentralization on Educational Attainment in Indonesia

  • Tatang MuttaqinEmail author
  • Marijtje van Duijn
  • Liesbet Heyse
  • Rafael Wittek
Part of the Development and Governance book series (DG, volume 2)


This study contributes to our knowledge on the impact of decentralization of the education sector in Indonesia. We extend existing research by examining the influence of both municipal factors and other explanatory variables on educational attainment in Indonesia. We focus on mean years of schooling as an indicator of educational attainment. We hypothesize that after decentralization, (1) educational attainment is higher compared to the pre-decentralization era, (2) regional variations in educational attainment will have increased, and (3) the fiscal capacity, degree of urbanization, and development will be higher, the higher the municipality’s mean year of schooling. The latter is also expected for the newly created municipalities of the past years. We test the hypotheses with panel data on 5,541,983 respondents aggregated to 3880 observations nested in 491 districts/cities nested in 32 provinces for the pre- and post-decentralization era. The results reveal the following. First, after decentralization, the length of schooling slightly increased, but progress in the length of schooling has slowed down a bit. Second, educational attainment variation between provinces slightly decreased, but the variation among municipalities increased. Third, the degree of municipalities’ development and urbanization has a significantly positive impact on improving educational attainment, while the fiscal capacity and the status of being a new municipality do not have a significant effect on extending the length of schooling. Our findings suggest that especially rural areas and less developed municipalities have lagged behind in the attempt to improve Indonesia’s educational attainment.


Decentralization Educational attainment Regional variations Local government Indonesia 


  1. Arina, S. N. (2011). The effect of change in compulsory education on affecting birth weight. Tilburg: Tilburg University.Google Scholar
  2. Bardhan, P. (2002). Decentralization of governance and development. Journal of Economic Perspectives, 16(4/Fall 2002), pp. 185–205.Google Scholar
  3. Barro, R. J., & Lee, J. W. (2010). A new data set of educational attainment in the World, 1950–2010. In National Bureau of Economic Research, Working Paper 15902. Cambridge, MA.Google Scholar
  4. Basic Education Capacity Trust Fund, BEC TF. (2010). The Indonesia local education governance index (ILEGI): A report card of 50 local governments. Jakarta: MoEC, Kingdom of the Netherland, European Union, The World Bank.Google Scholar
  5. Berg-Schlosser, D. (2004). The quality of democracies in europe as measured by current indicators of democratization and good governance. Journal of Communist Studies and Transition Politics, 20(1), 28–55.CrossRefGoogle Scholar
  6. Besley, T., & Smart, M. (2007). Fiscal restraint and voter welfare. Journal of Public Economics, 91, 755–773.CrossRefGoogle Scholar
  7. Brancati, D. (2006). Decentralization: Fueling the fire or dampening the flames of ethnic conflict and secessionism? International Organization, 60(3), 651–685.CrossRefGoogle Scholar
  8. Buchmann, C., & Brakewood, D. (2000). Labor structure and school enrolments in developing societies: Thailand and Kenya compared. Comparative Education Review, 44(2), 175–204.CrossRefGoogle Scholar
  9. Budiman, A. (1988). The emergence of the bureaucratie capitalist state in Indonesia’. In L. T. Ghee (Ed.), Reflections on development in Southeast Asia (pp. 110–29). Singapore: ISEAS.Google Scholar
  10. Cohen, J. M., & Peterson, S. B. (1999). Administrative decentralization: Strategies for developing countries. West Hartford: USA, Kumarian Press Inc.Google Scholar
  11. Cohen, J. M., & Uphoff, N. (1997). Rural development participation: Concepts measures for project design implementation and evaluation. Inthado: NewYork, Cornell University.Google Scholar
  12. Crook, R., & Manor, J. (1998). Democracy and decentralization in South Asia and West Africa: Participation, accountability and performance. Cambridge, UK: Cambridge University Press.Google Scholar
  13. Devas, N. (2002). Issues in fiscal decentralisation: Ensuring resources reach the (poor at) the point of service delivery. Prepared for Workshop on Improving Service Delivery in Developing Countries, Eynsham Hall, November 24–30, 2002. DFID, International Development Department, School of Public Policy, University of Birmingham.Google Scholar
  14. Duncan, C. R. (2007). Mixed outcomes: The impact of regional autonomy and decentralization on indigenous ethnic minorities in Indonesia. Development Change, 38(4), 711–733.CrossRefGoogle Scholar
  15. Faguet, J. P., & Sanchez, F. (2006). Decentralization’s effects on educational outcomes in Bolivia and Colombia. DEDPS Working Papers, 47. Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science, London, UK.Google Scholar
  16. Filmer, D., & Pritchett, L. H. (2001). Estimating wealth effect without expenditure data or tears: An application to educational enrollments in states of India. Demography, 38(1), 115–132.Google Scholar
  17. Galiani, S., & Schargrodsky, E. (2002). Evaluating the impact of school decentralization on education quality. Economia, 2(2), 275–314.Google Scholar
  18. Habibi, N., Huang, C., Miranda, D., Murillo, V., Ranis, G., & Sarkar, M., et al. (2001). Decentralization in Argentina. Economic growth. Center Discussion Paper 825. Yale University.Google Scholar
  19. Halim, A. (2004). Bunga rampai manajemen keuangan daerah. Yogyakarta: UPP AMP YKPN.Google Scholar
  20. Harmantyo, D. (2011). Desentralisasi,otonomi,pemekaran daerah dan pola perkembangan wilayah di Indonesia. Seminar Nasional dan PIT-IGI, Bali 22–23 Oktober 2011.Google Scholar
  21. Haryanto, A. (2010). Improving service quality of district education office (DEO) in Indonesia decentralized education system. Dissertation in RMIT Australia.Google Scholar
  22. Hayek, F. A. (1948). Individualism and economic order. Chicago: University of Chicago Press.Google Scholar
  23. Heredia-Ortiz, E. (2007). The impact of education decentralization on education output: A cross-country study. Economics Dissertations Paper 21, George State University.Google Scholar
  24. Hofman, B., & Kaiser, K. (2006). Decentralization, democratic transition, and local governance in Indonesia. In P. Bardhan & D. Mookherjee (Eds.), Decentralization and local governance in developing countries. Cambridge: The Massachusetts Institute of Technology Press.Google Scholar
  25. The Republic of Indonesia, RI (1945). The Indonesia constitution.Google Scholar
  26. The Republic of Indonesia (2002). The Indonesia constitution, Amendment IV. Google Scholar
  27. The Republic of Indonesia, RI (2003). Law No.20/2003 on National education system. Jakarta: Ministry of State Secretary.Google Scholar
  28. The Republic of Indonesia, RI (2004). Law No. 32/2004 on Regional government and Law No. 33/2004 on Regional fiscal balance. Jakarta: Ministry of State Secretary.Google Scholar
  29. Central Bureau Statistics (CBS), Republic of Indonesia. (2013) Accessed 27 February 2014.
  30. Central Bureau Statistics (CBS), Republic of Indonesia. National social economic survey 1996–1999 and 2007–2011.Google Scholar
  31. Jayasuriya, R., & Wodon, Q. (2003). Measuring and explaining country efficiency in improving health and education indicators in efficiency in reaching the millennium development goals. World Bank Working Paper, 9, pp. 5–16.Google Scholar
  32. Jeon, S. (2011). Mechanisms of labor transition during agricultural transformation: The cases of South Korea and Indonesia. In International Conference on Asia Agriculture and Animal IPCBEE (vol. 13). Singapore: IACSIT Press.Google Scholar
  33. Johansone, I. (2010). Achievement Equity by Urbanization in Latvia’s Primary Education—Analysis of PIRLS 2006 and TIMSS 2007 Data. TIMSS & PIRLS International Study Center, Boston College.Google Scholar
  34. Johnson, C. (2001). Local democracy, democratic decentralisation and rural development: Theories, challenges and options for policy. Development Policy Review, 19(4), 521–532.CrossRefGoogle Scholar
  35. Kaiser, K., Pattinasarany, D., & Schulze, G.G. (2006). Decentralization, Governance, and Public Services in Indonesia  in Decentralization. In G. Peterson, P. Smoke, & E. J. Gómez (Eds.) Latin America and Asia: An Inter-Disciplinary Perspective. Cheltenham, United Kingdom: Edward Elgar.Google Scholar
  36. Kaufmann, D., Kraay, A., Mastruzzi, M. (2009). Governance matters VIII: Aggregate and individual governance indicators for 1996–2008. World Bank Policy Research Working Paper No. 4978. Washington, D.C.Google Scholar
  37. Kessides, C. (2005). The contributions of urban development to economic growth and poverty reduction in Sub-Saharan Africa. The World Bank: Transport and Urban Development Department.Google Scholar
  38. Kristiansen, S., & Pratikno, (2006). Decentralising education in Indonesia. International Journal of Educational Development, 26, 513–531.CrossRefGoogle Scholar
  39. Litvack, J., Junaid, A., & Richard, B. (1998). Rethinking decentralization in developing countries. World Bank Sector Studies Series. Washington, DC: The World Bank.Google Scholar
  40. Mackie, J., & MacIntyre, A. (1994). Politics. In H. Hill (Ed.), Indonesia’s new order: The dynamics of socio-economic transformation (pp. 1–53). Sydney: Allen & Unwin.Google Scholar
  41. Madeira, R.A. (2012). The effects of decentralization on schooling: Evidence from the Sao Paulo State’s education reform. Working Paper No. 26, Department of Economics, University of Sao Paulo.Google Scholar
  42. Manor, J. (1999). The political economy of democratic decentralization. Washington DC: The World Bank.CrossRefGoogle Scholar
  43. Mawhood, P. (1983). Local government in the Third World. Chichester: Wiley.Google Scholar
  44. Ministry of Development of Disadvantaged Regions, MDDR (2011). Accessed 27 February 2014.
  45. Ministry of Finance, MoF. (2012). Budget statistics. Jakarta.Google Scholar
  46. Ministry of Home Affair, MoHA. (2012). Accessed 27 February 2014.
  47. Nordholt, H. (2003). Renegotiating boundaries; Access, agency and identity in post-Soeharto Indonesia. Bijdragen tot de Taal-, Land- en Volkenkunde, 159(4), 550–589.Google Scholar
  48. Oates, W. E. (1972). Fiscal federalism. New York: Harcourt Brace Jovanovich.Google Scholar
  49. Oketch, M., & Rolleston, C. (2007). Policies on free primary and secondary education in East Africa: A review of the literature. In Create pathways to access. Brighton: University of Sussex, Research Monograph No. 10.Google Scholar
  50. Prud’homme, R. (1995). On the dangers of decentralization. The World Bank Research Observer, 10, 2.Google Scholar
  51. Qibthiyyah, R. M. (2008). Essays on political and fiscal decentralization. Dissertation, Georgia State University. Accessed 21 January 2015.
  52. Rasbash, J., Steele, F., Browne, W., & Goldstein, H. (2014). A user’s guide to MLwiN 2.31. London: Institute of Education.Google Scholar
  53. Rondinelli, D. A., & Nellis, J. R. (1986). Assessing decentralization policies in developing countries: A case for cautious optimism. Development Policy Review, 4(1), 3–23.CrossRefGoogle Scholar
  54. Sifuna, D. N. (2005). The illusion of universal free primary education in Kenya. Wajibu, 20(4).Google Scholar
  55. Simatupang, R. R. (2009). Evaluation of decentralization outcomes in Indonesia: Analysis of health and education sectors. Economics Dissertations.Google Scholar
  56. Sjahrir, B. S., & Kis-Katos, K. (2011). Does local governments’ responsiveness increase with decentralization and democratization? Evidence from sub-national budget allocation in Indonesia. University of Freiburg, Department of International Economic Policy.Google Scholar
  57. Snijders, T. A. B., & Bosker, R. J. (2012). Multilevel analysis: An introduction to basic and advanced multilevel modeling (2nd ed.). London: SAGE publications Ltd.Google Scholar
  58. Subroto, P. (2007). Financing education sector under the current decentralized system in Indonesia: Disparities in education expenditure per student at public junior secondary schools. Dissertation, University of Pittsburgh.Google Scholar
  59. Sumarto, S., Suryahadi, S., & Arifianto, A. (2004). Governance and poverty reduction: Evidence from newly decentralized Indonesia. SMERU Working Paper. Jakarta: SMERU Research Institute.Google Scholar
  60. Tiebout, C. M. (1956). A pure theory of local expenditures. Journal of Political Economy, 64, 416–424.CrossRefGoogle Scholar
  61. Tommasi, M., & Weischelbaum, F. (1999). A principal-agent building block for the study of decentralization and integration. Working Paper No. 20, Department of Economics, Universidad de San Andre´s.Google Scholar
  62. Treisman, D. (2000). Decentralization and the quality of government. Unpublished paper. Accessed 27 February 2014.
  63. UNDP. (1999). Decentralization: A sampling of definitions. Working paper prepared in connection with the Joint UNDP-Government of Germany evaluation of the UNDP role in decentralization and local governance.Google Scholar
  64. UNDP. (2002). Human development report: Deepening democracy. Oxford, New York: The United Nations Development Programme.Google Scholar
  65. Uphoff, N. (1997). Institutional capacity and decentralization for rural development. Rome: Technical Consultation on Decentralization.Google Scholar
  66. Usman, S. (2001). Indonesia’s decentralized policy: Initial experiences and emerging problems. Paper presented at the European Southeast Asian Studies Conference, London: SOAS, September.Google Scholar
  67. Williamson, I. P., Rajabifard, A., & Enemark, S. (2003). Capacity building for SDIs. Proceedings of 16th United Nations Regional Cartographic Conference for Asia and the Pacific, Okinawa, Japan. 14–18 July, E/CONF/95/1, 17. p. 35.Google Scholar
  68. World Bank. (2003). Decentralizing Indonesia: A regional public expenditure review overview report. Jakarta: East Asia Poverty Reduction and Economic Management Unit.Google Scholar
  69. World Bank. (2004). World development report: Making services work for poor people. Washington DC: World Bank.Google Scholar
  70. World Bank. (2008). Spending for development: making the most of Indonesia’s new opportunities: Indonesia public expenditure review 2007.Google Scholar
  71. UNESCO. (2011). Accessed 21 January 2015.

Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  • Tatang Muttaqin
    • 1
    Email author
  • Marijtje van Duijn
    • 2
  • Liesbet Heyse
    • 2
  • Rafael Wittek
    • 2
  1. 1.Department of Sociology, Interuniversity Center for Social Science Theory and Methodology (ICS)University of GroningenGroningenThe Netherlands
  2. 2.Department of Sociology, Interuniversity Center for Social Science Theory and Methodology (ICS)University of GroningenGroningenThe Netherlands

Personalised recommendations