The paper uses data from the Village Potential Surveys (PODES) (63?000 villages, surveyed in 1996 and 2000) to show the lessons that can be learned in responding to economic crisis from Indonesia's Social Safety Net Program or Jaring Pengaman Sosial (JPS). It focuses on the JPS scholarship component, analysing its impact on primary and secondary school dropout at the community level. It finds that the scholarship program reduces the chance of dropout in primary school but not in junior secondary school. Participation in the government's employment creation programs is significantly and positively correlated with dropout, suggesting that given the opportunity junior secondary school students will drop out to support their families. Copyright © 2010 John Wiley & Sons, Ltd.