INTERNAL MIGRATION AND POVERTY REDUCTION IN A DEVELOPING COUNTRY: QUANTITATIVE EVIDENCE OF INDONESIA 1990-2011

Internal migration can both cause and be caused by poverty. Similarly, poverty can be alleviated as well as exacerbated by population movement. Many studies have been investigated to assess the impact of integral migration in poverty alleviation. However, there is no study about analyzing ambivalent relationships between migration and poverty in a developing country such as Indonesia especially for recent period. Using annually data for the period of 1990 to 2011, this paper attempts to investigate the relationships between internal migration and poverty in Indonesia. In this paper, the internal migration and poverty alleviation will be investigated in several contexts. First, the study explores the dynamic relationships of interprovincial migration patterns in Indonesia. Second, it unravels the ambivalent relationships between migration and poverty in the pre-and post-Asian crisis period. The study employs Granger Causality and Variance Decomposition which are obtained from the Vector Error Correction (VEC) approach for 33 provinces in Indonesia. The finding will reveal important recommendations for policy makers in order to derive appropriate policies in Indonesia.