Industrial districts and multidimensional household welfare: new evidence from Indonesia

Industrialisation is widely viewed as a pathway to economic transformation and poverty reduction, yet its welfare implications at the household level remain underexplored. While previous studies have examined the macroeconomic effects of industrial growth, little is known about whether residing in industrial-based regions translates into tangible improvements in family well-being. This study investigates the relationship between industrial exposure and multidimensional household welfare in Indonesia, using microdata from the 2022 National Socio-Economic Survey (Susenas) focused on East Java Province. Household welfare is measured through a multidimensional family welfare index (MFWI) encompassing six capability domains: food security, knowledge access, health access, decent housing, energy security and employment access. The analysis applies the inverse probability weighted regression adjustment (IPWRA) estimator to estimate the association between residence in industrial-base districts and multidimensional household welfare. The results reveal a consistent welfare advantage for households residing in industrial-base districts. Families in these areas exhibit higher achievements across most welfare dimensions, particularly in decent housing, employment opportunities, educational attainment and access to modern energy. These improvements reflect the role of industrial regions as nodes of economic connectivity, where infrastructure and labour-market expansion enhance living conditions.