The Impact of Mandatory Spending on Poverty in Indonesia

Aristho Refo Putra () and Evi Noor Afifah ()
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Aristho Refo Putra: Department of Economics, Faculty of Economics & Business, Universitas Gadjah Mada
Evi Noor Afifah: Department of Economics, Faculty of Economics & Business, Universitas Gadjah Mada

No 202407006, Gadjah Mada Economics Working Paper Series from Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada

Abstract: Poverty in Indonesia remains a critical issue, with a current rate of 9.57% that has not met the RPJPN target of 6.5% to 7.5%. This study analyzes the impact of mandatory government spending in education, health, and infrastructure on poverty from 2011 to 2022, using Generalized Method of Moments (GMM) with data from 33 provinces. Findings indicate that spending in education and health significantly reduces poverty, while infrastructure spending does not show a notable effect. To effectively combat poverty, the research recommends that the central government optimize its allocation of mandatory spending and enhance funding in other areas to achieve better outcomes.

Keywords: Education spending; health spending; infrastructure spending; poverty; Generalized Methods of Moments (GMM) (search for similar items in EconPapers)
JEL-codes: E62 H51 H52 H54 I32 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2024-07
New Economics Papers: this item is included in nep-sea
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