Does Social Assistance Reduce Poverty for Sustainable Development? The Mediating Roles of Income Inequality and Human Development

Abstract

This study examines poverty reduction strategies implemented through government social assistance programs that are relevant to Sustainable Development Goal (SDG) 1 (No Poverty) and 10 (Reduced Inequalities) in Aceh, Indonesia. This study employed a mixed-method approach that combined field research and secondary data analysis. A cross-sectional survey was conducted in 2024, and primary data were collected through questionnaires in Pidie Regency. Descriptive statistics, regression analysis, and Structural Equation Modeling (SEM) were employed to analyze data from 152 households that had received social assistance for more than one year. The findings indicate that social assistance significantly reduces income inequality (β = -0.590, p < 0.001) and improves human development (β = 0.475, p < 0.001), while its direct effect on poverty is relatively weak (β = -0.132, p < 0.10). Income inequality has a strong positive effect on poverty (β = 0.644, p < 0.001), whereas human development does not significantly affect poverty. The structural model explains 51.6% (R² = 0.516) of the variance in poverty. The mediation analysis reveals that income inequality significantly mediates the effect of social assistance on poverty reduction (β = -0.380, p < 0.001), while human development does not currently mediate this relationship. It implies that social assistance can reduce poverty without immediate improvements in human development. The study concludes that social assistance contributes to poverty reduction primarily through its redistributive effects, highlighting the need for sustained government support and improved targeting to ensure the long-term sustainability of the program.