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Does Human Capital Reduce Poverty in Indonesia? Evidence from System-GMM District Dynamic Panel Data

In: Economics and Finance Readings

Author

Listed:
  • B. S. Nazamuddin

    (Department of Development Economics, Faculty of Economics and Business)

  • Putri Bintusy Syathi

    (Department of Development Economics, Faculty of Economics and Business)

  • Riswandi Riswandi

    (Department of Development Economics, Faculty of Economics and Business)

  • Fitriyani Fitriyani

    (Department of Development Economics, Faculty of Economics and Business)

  • Asri Diana

    (Department of Development Economics, Faculty of Economics and Business)

Abstract

The varying rates of human capital development across regions present a significant challenge for Indonesia. This study examines the role of education and health in reducing poverty in Indonesia. Utilizing data from 417 districts between 2019 and 2023, we employed the system-GMM approach. Our findings indicate that the contemporaneous effect of the logarithm of the human capital index is negative, suggesting that greater human capital accumulation results in lower poverty within the same period; however, this effect is not long-lasting unless education and health explanatory variables are considered separately. The impacts of both the logarithms of years of schooling and life expectancy are significant, although their directions differ. This implies that the quality of educational services has not kept pace with the increased accessibility to education. Therefore, priority should be given to improving the quality of education in disadvantaged areas.

Suggested Citation

  • B. S. Nazamuddin & Putri Bintusy Syathi & Riswandi Riswandi & Fitriyani Fitriyani & Asri Diana, 2025. "Does Human Capital Reduce Poverty in Indonesia? Evidence from System-GMM District Dynamic Panel Data," Springer Books, in: Evan Lau & Jaime Moll de Alba & Lee Ming Tan (ed.), Economics and Finance Readings, pages 75-96, Springer.
    • Handle: RePEc:spr:sprchp:978-981-96-6998-1_5
    DOI: 10.1007/978-981-96-6998-1_5
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