A SIMULTANEOUS STUDY OF POVERTY RATE , CHILD LABOR AND DROPOUT RATE IN INDONESIA

Poverty is a major cause of child labor and dropout case. Poor families usually encourage their children to work looking for additional income as a way to survive. Based on previous research there is a causal relationship of poverty rate, number of child labor and dropout rate. Characteristics of poverty rate, child labor and dropout rate can be assessed from the demographic characteristics and socioeconomic characteristics are interrelated. This study aims to model the interdependent relationship of poverty rate, child labor and dropout rate in Indonesia and factors that influence them. One appropriate method is used to model the interdependent relationship of these three variables is the simultaneous equation models. From the results of the identification of the model equations were used the method Three Stage Least Square (3SLS) with 3 equations. The number of variables is 11 pieces consist of 3 endogenous variables and 8 predetermined variables. The result showed that child labor in Indonesia is influenced significantly by poverty rate, dropout rate, and percentage of household heads who worked in agriculture. Poverty rate in Indonesia is influenced significantly number of child labor, dropout rate, and percentage of household heads who worked in agriculture. While dropout rate is influenced significantly by number of child labor, percentage of household with members more than six, percentage of household heads who did not complete primary school and percentage of household head who completed basic education. R-square of system is about 66.28%, meaning that total diversity of poverty rate, number of child labor and dropout rate in Indonesia in 2013 which can be explained by the explanatory variables in the system about 66.28%. Keywords: 3 bhaSLS, simultaneous equation models, poverty, child labor, dropout