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The Impact of Lagging-Region Status on District Poverty in Indonesia

Author

Listed:
  • Rus'an Nasrudin

    (PhD Scholar, Arndt-Cordent Department of Economics, The Australian National University)

Abstract

Reducing imbalances of development progress across regions is one of important policy agenda Indonesia. This paper examines the impact of policy that assign lagging-region status namely status daerah tertinggal (DT) on poverty rate and poverty gap among districts in Indonesia in the two period of SBY presidency. The panel data fixed effect combined with propensity score matching is used to tackle the selection bias due to the nature of the policy, unobserved heterogeneity and omitted variable bias. The results show that the lagging-region status that was aimed to mainstream central and district’s budget toward lagging regions statistically significant reduces poverty rate and poverty gap in the period. The DT status, on average is associated with 0.75 percentage point of reduction in the poverty rate and 7% reduction in the poverty gap index.

Suggested Citation

  • Rus'an Nasrudin, 2016. "The Impact of Lagging-Region Status on District Poverty in Indonesia," Working Papers in Economics and Business 201602, Faculty of Economics and Business, University of Indonesia, revised Jun 2016.
    • Handle: RePEc:lpe:wpecbs:201602
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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