Family dissolution can have far-reaching implications for human capital formation and intergenerational mobility. This study provides an empirical analysis of how parental divorce influences children’s educational attainment and long-term income outcomes in Indonesia, where marital stability is both a cultural value and an informal economic safety net. Using nationally representative longitudinal data from the Indonesia Family Life Survey (IFLS-4 and IFLS-5), the paper employs an instrumental variable (IV) approach to address potential endogeneity between parental divorce and children’s outcomes. Specifically, parental age at marriage is utilized as an instrument, based on the theoretical premise that earlier marriage increases the likelihood of divorce but is exogenous to the child’s later educational and labor market achievements. The results show children of divorced parents complete approximately 6.7 fewer years of education and earn on average IDR 782,000 less in monthly income compared to peers from intact families, controlling for comparable socioeconomic factors. These findings underscore the economic cost of family instability and highlight how early-life disruptions can hinder upward mobility through reduced human capital accumulation. The study concludes by emphasizing the need for policy interventions that integrate education, welfare, and social resilience to safeguard children’s long-term development in the face of rising divorce trends.

Authors:
Khumairah Khumairah, Universitas Gadjah Mada and Universitas Islam Bandung, Indonesia
Eny Sulistyaningrum, Universitas Gadjah Mada, Indonesia

About the Presenter(s)
Khumairah is an Assistant Professor of Development Economics at the Faculty of Economics and Business, Universitas Islam Bandung, Indonesia.

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https://www.linkedin.com/in/khumairahmdan/

See this presentation on the full schedule – Monday Schedule

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