The Effect of Government Expenditure on Poverty in Indonesia

The objective of this research is to determine the effect of education function expenditure, social protection function expenditure and health function expenditure on poverty in Indonesia. The data used in this research are secondary data sourced from the Ministry of Finance and the Central Bereau of Statistics. The analysis method used in this research is panel data regression. Based on the regression results, it is obtained that the fixed effect model as the best model to be used in analysis. Based on the results of the partial test, it was found that social protection function expenditure had a negative effect on poverty in Indonesia, while health function expenditure had a positive effect on poverty in Indonesia, while education function expenditure has no effect on poverty in Indonesia. Furthermore, when viewed simultaneously, education function expenditure, social protection functions expenditure and health function expenditure have a positive effect on poverty in Indonesia with an Adjusted R-squared value of 0.9973 or 99.73 percent. These results show that 0.27 percent are influenced by variables outside the model. As a consideration for the Indonesian government to overcome poverty, it can be done by increasing social protection function expenditure, this is because social protection expenditure is significantly able to reduce poverty levels in Indonesia. While on education function expenditure and health function expenditure, to reduce poverty in Indonesia, expenditure is not only focused on mandatory spending, but the government should be able to allocate budget for programs that are right on target and can increase human resource productivity.