Analysis of Factors Affecting Poverty Depth Index in Papua Province Using Panel Data Regression

Abstract

One of the main problems in Papua Province is poverty, because the Poverty Depth Index (P1) in Papua Province is greater than other province, which was 7.17 in 2019. This value is bigger than the Poverty Depth Index in Indonesia which was only 1.55. This study will analyse the factors that affect the Poverty Depth Index in Papua Province in District/City in 2012 until 2019 using the panel data regression method. Panel data regression is used because this method can combine cross section data with time series data. The results of the selection of best model show that the best model is Fixed Effect Model (FEM) and test assumptions of residual covariance variance structure show that the model has heteroscedasticity structure. Therefore, the best model is Fixed Effect Model (FEM) with cross-section weighted. The model has an R-square value of 82.5% with significant variables are Human Development Index and average expenditure per capita in one month.