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The Impact of Mandatory Spending on Poverty in Indonesia

Author

Listed:
  • 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)

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.

Suggested Citation

  • Aristho Refo Putra & Evi Noor Afifah, 2024. "The Impact of Mandatory Spending on Poverty in Indonesia," Gadjah Mada Economics Working Paper Series 202407006, Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada.
    • Handle: RePEc:gme:wpaper:202407006
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    File URL: https://simpan.ugm.ac.id/s/60meFdEsp0Vlkb3
    File Function: First version, 2024
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    Keywords

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    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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