Do Fiscal Decentralization and Human Development Index Affect Poverty in Indonesia?

Abstract

The study aim is to analyze how the effects of fiscal decentralization and Human Development Index (HDI) on poverty in Indonesia. This study employ secondary data in the form of time series from 2010 to 2017, and cross section data consisting of 33 provinces in Indonesia, so that the type of polled data can be categorized that is a combination of time series data (for 8 years) with cross section data 33 Province in Indonesia. The analytical method used is PLS (Panel Least Square) with a comparison of two models namely the Fixed Effect and Robust Least Square models. From the results of the Fixed Effect regression model shows that DDF has a negative and insignificant effect on Poverty, while HDI has a negative and significant effect on Poverty. The study found that each additional unit of DDF reduced poverty by 10.97 percent if the HDI remains. In addition, the Human Development Index unit reduced the number of poor by 79.83 percent if the DDF remains. These findings implied that to reduce the poverty, efforts to improve HDI need to be focused.

The impact of tax reforms on human development index: Literature review approach

“…Human Development Index—HDI is an index proposed by the UNDP to measure well‐being of the people of a country worldwide (Gaye, 2011; Ghislandi et al, 2018; Graafland, 2019; Isaac et al, 2021; Khodabakhshi, 2011; Mazzanti et al, 2020; Mwabukojo, 2019; Ofosu‐Mensah Ababio et al, 2020; Soondram et al, 2022; Talaber, 2006; United Nations, 2007; Varlitya et al, 2018). Human Development Index is a very useful measure for international comparison between countries in respect of people's welfare (Perez & Claveria, 2020; Ülengin et al, 2011).…”

“…Various studies on socio‐economics identified longevity, knowledge, and income inequality as the major components of the Human Development Index (Avik & Sengupta, 2019; Batrancea et al, 2018; Etim et al, 2020; Ghislandi et al, 2018; Mukherjee et al, 2014; Raghupathi & Raghupathi, 2020; Sehrawat & Giri, 2014; Ülengin et al, 2011; Varlitya et al, 2018; Yang & Mukhopadhaya, 2019; to mention few). The 2018 UNDP report reiterated that the HDI combines health, education, and income information in one number to express human progress.…”

“…It may be analysed into how long a human being is expected to live in the country and the infant mortality rate. Life expectancy is often affected by epidemic diseases like HIV and EBOLA among others (Mukherjee et al, 2014; Raghupathi & Raghupathi, 2020; Sehrawat & Giri, 2014; Ülengin et al, 2011; UNDP, 2018; Varlitya et al, 2018). COVID‐19 has also affected life expectancy and HDI levels throughout the world.…”

“…Knowledge encompasses access of human beings to quality and relevant education. It is measured by expected years of schooling by children and mean years of schooling among adults (Varlitya et al, 2018).…”

“…Human Development Index—HDI is an index proposed by the UNDP to measure well‐being of the people of a country worldwide (Gaye, 2011; Ghislandi et al, 2018; Graafland, 2019; Harttgen & Klasen, 2011; Herrero et al, 2010; Khodabakhshi, 2011; Mazzanti et al, 2020; Mtei et al, 2012; Mwabukojo, 2019; Soondram et al, 2022; Stewart, 2019; Talaber, 2006; United Nations, 2007; Varlitya et al, 2018).…”