Does Parental Wealth Foster Youth Inactivity? An Empirical Analysis of the NEET Phenomenon in Indonesia

Abstract

While Indonesia is poised to benefit from a demographic dividend, the high percentage of youth who are not in education, employment, or training (NEET) at 23.2% poses a significant threat to human capital accumulation in the long-term. This study investigates the relationships among household wealth, reservation wages, and the probability of youth becoming NEET with data from the Indonesia Family Life Survey (IFLS). We specifically examine the “laziness” hypothesis; that is, whether increased parental wealth disincentivizes productive activity. Our empirical results find no robust evidence that family wealth directly increases the propensity for voluntary inactivity. Instead, we find that youth from wealthier households often utilize their financial “safety net” to pursue higher education or wait for higher-quality employment. Furthermore, gender remains a critical determinant as married women disproportionately fall into the NEET category due to domestic responsibilities. These findings suggest that policy interventions, such as the Kartu Prakerja program, should be refined through the integration of longitudinal datasets like the IFLS to facilitate accurate, data-driven evaluations of distinct NEET subgroups. Such integration is vital for addressing labor market mismatches and gender-based barriers, thus ensuring that policies transition from addressing income-based inactivity toward targeted human capital development.

View PDF – https://doi.org/10.53383/100426

Keywords

NEET, Children, Logistic regression