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The Impact of Lagging-Region Status on District Poverty in Indonesia

Author

Listed:
  • Rus’an Nasrudin

    (Arndt Corden Department of Economics, Crawford School of Public Policy, Australian National University)

Abstract

Reducing subnational imbalances of development progress is unquestionable policy for heterogeneous Indonesia. This paper examines the impact of policy that assigns a lagging-region status namely status daerah tertinggal (DT) on poverty rate and poverty gap among districts in Indonesia in the two period of SBY presidency. The panel data fixed effect combined with propensity score matching is used to tackle the selection bias due to the nature of the policy, unobserved heterogeneity and omitted variable bias. The results show that the lagging-region status that was aimed to mainstream central and district’s budget toward lagging regions statistically significant reduces poverty rate and poverty gap in the period. The DT status, on average is associated with 0.75 percentage point of reduction in the poverty rate and 7% reduction in the poverty gap index

Suggested Citation

  • Rus’an Nasrudin, 2016. "The Impact of Lagging-Region Status on District Poverty in Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 62, pages 30-43, April.
    • Handle: RePEc:lpe:efijnl:201603
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    More about this item

    Keywords

    Lagging Regions; Poverty; Indonesia;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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