The heterogeneous impact of conditional cash transfers on child labor in Indonesia: Evidence from PIP and PKH programs

This study evaluates the impact of Indonesia’s conditional cash transfer (CCT) programs, Program Indonesia Pintar (PIP) and Program Keluarga Harapan (PKH), on child labor, utilizing data from the 2023 Indonesia National Socioeconomic Survey (SUSENAS). To address potential selection bias, we employed propensity score matching (PSM) to estimate the average treatment effect on the treated (ATT). The findings revealed a nuanced landscape. At the national level, PIP reduces child labor by approximately 2.1 hours per week, whereas PKH shows no statistically significant effect. However, a split-sample analysis uncovered significant regional heterogeneity: PIP reduced child labor in Java-Bali and Kalimantan-Sulawesi-Maluku-Papua, whereas PKH reduced child labor in Java-Bali and Sumatra. Further disaggregation by age group shows that both programs are most effective among younger children, with PIP producing significant but diminishing effects across all age groups and PKH’s impact largely confined to children under 13. These results underscore that the interplay between program design and cultural norms might be a crucial aspect of CCT effectiveness. We suggest that a uniform national policy is insufficient and recommend adopting a more targeted, region-sensitive and age-differentiated approach to maximize the impact of CCTs on reducing child labor in Indonesia.