What Kind of Government Expenditure Can Reduce Rural Poverty in Indonesia’s Provinces?

Abstract

The rural poverty facing Indonesia's provinces is much higher than urban poverty. it needs to be seriously addressed because rural poverty is more difficult to handle than urban poverty. The purpose of this study is to analyze whether local government spending in the provinces on health, education and social protection affects the percentage of rural poverty, the poverty-gap index and the rural poverty severity index. The research period is from 2010 to 2019 with panel data from 32 provinces in Indonesia. Local government spending in one province in this study is a combination of regional government spending and provincial government spending. The result of this study is that the combined government spending in one province in the health sector does not affect rural poverty, so it is necessary to reexamine the efficiency and effectiveness of health fund distribution. Provincial government education spending has had the effect of reducing rural poverty which is something that should be exhilarating. On the other hand, social protection funds increase rural poverty, so it needs to be re-evaluated, especially in terms of determining the priority of target recipients and the effectiveness of their distribution.