Effectiveness of Village Funds on Poverty Rate, Human Development Index, and Open Unemployment Rate 2019-2024 In East Java Province

Abstract

This study aims to assess the effectiveness of the Village Fund in improving village development in the 2019-2024 period, specifically in reducing poverty, increasing the Human Development Index (HDI), and reducing the Open Unemployment Rate (TPT). Although the Village Fund has been allocated to support village development, its effectiveness in reducing poverty and unemployment is still debatable due to various constraints, such as low human resource capacity and lack of community participation in budget management. This study contributes by analysing the effectiveness of the Village Fund using a panel data method based on the Fixed Effects Model (FEM) and Random Effects Model (REM), which provides new insights into the influence of the Village Fund on village development indicators and the factors that influence its effectiveness. The research method used is a quantitative approach with panel data analysis for 2019-2024, using secondary data related to poverty, HDI, and TPT. The best model selection is carried out through the Chow test, Hausman test, and Lagrange Multiplier test. The results show that the Village Fund significantly improves HDI but has not effectively reduced poverty and unemployment. The main obstacles in managing the Village Fund are the low capacity of village officials and the lack of community participation in budget monitoring and utilisation. Although the Village Fund can improve the quality of life through increased HDI, its effectiveness in reducing poverty and unemployment is still limited. Therefore, more strategic policies and improved management capacity are needed so that the Village Fund can truly encourage inclusive and sustainable village development.