A study of poverty and allocative efficiency in Sriharjo, rural Java, Indonesia
Date
1978
Authors
Ginting, Meneth
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Abstract
This study is about the phenomena of poverty and allocative
efficiency in the village of Sriharjo in rural Java in 1972. An
attempt has been made to describe and to explain these phenomena.
The main characteristics of the village and the household
s~mp]e can be stated as (i) too many people and (ii) not enough land.
However , the village of Sriharjo is not the most densely populated
village in the Kabupaten (District) Bantul in the Special Region of
Yogyakarta . It was ranked 44 out of 73 villages in terms of
popUlation density in the Kabupaten.
In the analysis of poverty, an attempt was made to compare the
data from Sriharjo and the data from SUSENAS (National Social Economic
Survey) for rural Java analysed in other studies. It was found that
the situation in Sriharjo was worse than the average calculated for
rural Java from SUSENAS , in the sense that the percent<1gc of people
below the poverty line (the so-called cukupan level of living) in
Sriharjo is more than that calculated for rural Java. However, the
Gini coefficient of income concentration for Sriharjo is still less
than the Gini coefficient calculated for some countries in Asia. Also
the share of the poorest 40% is more than 17% of the total income,
suggesting that the inequality of income distribution in Sriharjo is
low .
The technique~ of the Lorenz curve, the Gini coefficient and the
share of the poorest 40% of total income are suitable for the measurement
of dispersion , but they do not explain the existence of the 'ceiling'
and the 'floor ' that seems to fix the range of the net income of the households in Miri-Sriharjo.
In relation to the net lncome per annum of the households
(income is one of the measurements of poverty), it was found that
the pekarangan (house compound, or house garden) is the main source
of net income (49 %) followed by sawah (wet rice field) which contributes
35% while the other earning activities outside agriculture only
contribute 16%.
One of the hypothesesthat was tested quantitatively was that the
net income of the household sample was substantially affected by certain
socio-economic factors. The socio-economic factors that were taken
into consideration were land controlled, number of earners, the age
of the head of the household, occupational patterns of the head of the
household as dununy variables and also the poverty line of cukupan as a
dununy variable. This hypothesis was tested by OLS with the semi-log
linear function, and the hypothesis was accepted for the whole household
sample , both the· non-cukupan and cukupan groups. In the comparison of the non-cukupan group with the cukupan group
the relation between net income and the socio-economic factors were
explained better in the cukupan group (the R² for the cukupan group was
larger than the R² for the non-cukupan group). However, with the Chow
test, the test of equality between the coefficients obtained from the
non-cukupan and cukupan groups - shows that the two relationships do not
differ significantly at the 95% level of significance. So the
hypothesis proposed is accepted in the same manner in both groups.
The term "efficiency" taken into consideration in this study is
allocative efficiency which refers to the optimum way in which a farm
combines inputs when faced with a given set of input prices . The
approach used to examine allocative efficiency has been to estimate a Cobb-Douglas production function with elasticities ∞i , and to make
some statistical tests of equality between the estimated marginal
value product of a factor (MVPi,) and its marginal factor cost (MFCi).
It was hypothesised that the farmers in Miri-Sriharjo are "efficient",
which conforms with the hyrothcsis rosed by Schultz (1965) that there
are few significant inefficiencies in the allocation of the factors of
production in traditional agriculture. The Schultz hypothesis was
rejected , which implies that there is still scope for increasing
agricultural product through the reallocation of existing resources, as
discussed in the present study. However, the scope for increasing
agricultural product is limited because of the characteristics of the
village and the household sample already mentioned : too many people
and not enough land.
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