The Mediating Role of the Human Development Index in the Relationship between Transfer Funds on Unemployment and Income Inequality in Aceh Province, Indonesia

Sucia Qamara Phonna; Teuku Zulham; Chenny Seftarita

doi:10.56225/finbe.v3i1.311

Authors

Sucia Qamara Phonna Department of Economics, Faculty of Economics and Business, Universitas Syiah Kuala, 23111 Darussalam, Banda Aceh, Indonesia
Teuku Zulham Department of Economics, Faculty of Economics and Business, Universitas Syiah Kuala, 23111 Darussalam, Banda Aceh, Indonesia
Chenny Seftarita Department of Economics, Faculty of Economics and Business, Universitas Syiah Kuala, 23111 Darussalam, Banda Aceh, Indonesia

DOI:

https://doi.org/10.56225/finbe.v3i1.311

Keywords:

Transfer funds, Unemployment, Gini index, Human Development Index

Abstract

The transfer of funds from the central government to Aceh Province tends to increase from 2013 to 2022. However, the high transfer funds have led to a lack of regional independence in Aceh, and problems such as unemployment and income inequality still need to be fully resolved. This study aims to investigate the effect of transfer funds on unemployment and income inequality with HDI as a mediator in Aceh Province. This study uses panel data from 23 districts/cities of Aceh Province from 2011-2022. The data were processed using panel regression and path analysis methods. The findings show that transfer funds have a positive and significant effect on HDI and income inequality and a significant negative effect on unemployment. Transfer funds indirectly affect the unemployment rate and income inequality through the human development index. The Aceh Provincial Government is advised to conduct more intensive policies to reduce the unemployment rate and income inequality in Aceh Province, especially through transfer funds.

References

Adriani, N. L. G. C., & Yasa, I. N. M. (2015). Pengaruh Pendapatan Asli Daerah dan Dana Perimbangan terhadap Tingkat Pengangguran melalui Bleanja Tidak Langsung pada Kabupaten/Kota di Provinsi Bali. E-Jurnal EP Unud , 4(11), 1328–1356.

Alam, S., & Simanjuntak, B. H. (2024). Effect of Fund Transfer, Revenue on Development Index as Moderation Variables. Journal of Business, Social and Technology, 5. https://bustechno.polteksci.ac.id/

Ann, D., Lantion, S., Musngi, G. V, & Cabauatan, R. R. (2023). Assessing the Relationship of Human Development Index (HDI) and Government Expenditure on Health and Education in Selected ASEAN Countries. International Journal of Social and Management Studies, 4(6), 13–26. http://www.ijosmas.org

Arham, M. A., & Hatu, R. (2020). Does Village Fund Transfer Address the Issue of Inequality and Poverty? A Lesson from Indonesia. The Journal of Asian Finance, Economics and Business, 7(10), 433–442. https://doi.org/10.13106/jafeb.2020.vol7.no10.433

Balseven, H. (2017). International Journal of Economics and Financial Issues Analysing the Effects of Fiscal Policy on Income Distribution: A Comparison between Developed and Developing Countries. International Journal of Economics and Financial Issues, 7(2), 377–383.

Cevik, S., & Correa-Caro, C. (2020). Growing (un)equal: fiscal policy and income inequality in China and BRIC+. Journal of the Asia Pacific Economy, 25(4), 634–653. https://doi.org/10.1080/13547860.2019.1699985

Christia, A. M., & Ispriyarso, B. (2019). Desentralisasi Fiskal dan Otonomi Daerah di Indonesia. Law Reform, 15(1), 149–163.

Daud, N., & Soleman, R. (2020). Effects of fiscal decentralisation on economic growth and human development index in the Indonesian local governments. Management Science Letters, 10(16), 3975–3980. https://doi.org/10.5267/j.msl.2020.7.012

Ernawati, E., Tajuddin, T., & Nur, S. (2021). Does government expenditure affect regional inclusive growth? An experience of implementing village fund policy in Indonesia. Economies, 9(4). https://doi.org/10.3390/economies9040164

Ersad, M. E., Amir, A., & Zulgani, Z. (2022). Dampak IPM, tingkat pengangguran dan tingkat kemiskinan terhadap ketimpangan pendapatan di Sumatera Bagian Selatan. Jurnal Paradigma Ekonomika, 17(2), 425–438. https://doi.org/10.22437/jpe.v17i2.15614

Fahriza, M. R., & Ariani, K. R. (2023). The Influence of Local Own Income and balanced Fund on HDI With Capital Expenditure as an Intervening Variable in Districts / Cities of Central Java (2019-2021). American Journal of Humanities and Social Sciences Research, 7(3), 187–201. www.ajhssr.com

Febriyani, A., & Anis, A. (2021). Pengaruh Pertumbuhan Ekonomi, Investasi Dan Indeks Pembangunan Manusia Terhadap Ketimpangan Distribusi Pendapatan Di Indonesia. Jurnal Kajian Ekonomi Dan Pembangunan, 3(4), 9. https://doi.org/10.24036/jkep.v3i4.12375

Gujarati. (2003). Introduction to Econometrics. Oxford University Press.

Hardinandar, F. (2020). Peran kebijakan fiskal terhadap trade-off antara ketimpangan dan kemiskinan di indonesia. . Inovasi: Jurnal Ekonomi, Keuangan, Dan Manajemen, 16(1), 1–10.

Hastuti, P. (2018). Desentralisasi Fiskal dan Stabilitas Politik dalam Kerangka Pelaksanaan Otonomi Daerah di Indonesia. Simposium Nasional Keuangan Negara, 1(1), 789–799.

Hernandez, H. (2021). Testing for Normality: What is the Best Method? ForsChem Research Reports, 6, 2021–2026. https://doi.org/10.13140/RG.2.2.13926.14406

Holden, S., & Sparrman, V. (2018). Do Government Purchases Affect Unemployment? The Scandinavian Journal of Economics, 120(1), 124–158. https://doi.org/10.1111/sjoe.12214

Holik, A. (2020). The Impact of Regional Fund on Unemployment. JEJAK (Journal of Economics and Policy), 13(1), 43–68. https://doi.org/10.15294/jejak.v13i1.19105

Kousar, S., Ahmed, F., Afzal, M., & Segovia, J. E. T. (2023). Is government spending in the education and health sector necessary for human capital development? Humanities and Social Sciences Communications, 10(1), 62. https://doi.org/10.1057/s41599-023-01514-3

Kuo, C.-H., & Miyamoto, H. (2019). Fiscal stimulus and unemployment dynamics. The B.E. Journal of Macroeconomics, 19(2). https://doi.org/10.1515/bejm-2016-0211

Liu, Y., Martinez-Vazquez, J., & Wu, A. M. (2017). Fiscal decentralisation, equalisation, and intra-provincial inequality in China. International Tax and Public Finance, 24(2), 248–281. https://doi.org/10.1007/s10797-016-9416-1

Mahroji, D., & Nurkhasanah, I. (2019). Pengaruh Indeks Pembangunan Manusia terhadap Tingkat Pengangguran di Provinsi Banten. Jurnal Ilmu Ekonomi, 9(1), 51–72. http://jurnal.untirta.ac.id/index.php/

Maryanti, S., Handra, H., & Yonnedi, E. (2022). The Link between Fiscal Decentralization and Unemployment Evidence from Indonesia. ADPEBI International Journal of Business and Social Science, 2(2), 107–119. https://doi.org/10.54099/aijbs.v2i2.314

Putro, R. P. (2016). Pengaruh Desentralisasi Fiskal terhadap Tingkat Pengangguran di Wilayah Sumatera. Indonesian Treasury Review, 1(2), 85–100.

Qamariyah, L., Mardianita, O., & Rusgianto, S. (2022). Pengaruh IPM, Investasi, dan UMP terhadap Tingkat Pengangguran Terbuka di Jawa Timur Tahu n 2013-2020. OECONOMICUS Journal of Economics, 7(1), 1–15.

Rachma, D. D., Somaji, R. P., & Kustono, A. S. (2019). Government expenditure, poverty and income inequality in Indonesia: New evidence from village funds. International Journal of Scientific and Technology Research, 8(8), 38–42.

Regina, Sinring, B., & Arifin. (2020). Analysis the Effects of Poverty, General Allocation Fund and Economic Growth to Human Development Index (HDI) in Indonesia. Jurnal Economic Resource, 3(2). https://doi.org/10.57178/jer.v3i2.300

Siburian, M. E. (2020). Fiscal decentralisation and regional income inequality: evidence from Indonesia. Applied Economics Letters, 27(17), 1383–1386. https://doi.org/10.1080/13504851.2019.1683139

Silvia, V. (2020). Statistika Deskriptif. Andi.

Suhyanto, O., Juanda, B., Fauzi, A., & Rustiadi, E. (2021). The Effect of Transfer Funds on District/Municipality Development Performance in West Java Province Indonesia. International Journal of Economics and Financial Issues, 11(3), 22–27. https://doi.org/10.32479/ijefi.9399

Suparman, S., & Muzakir, M. (2023). Regional inequality, human capital, unemployment, and economic growth in Indonesia: Panel regression approach. Cogent Economics & Finance, 11(2). https://doi.org/10.1080/23322039.2023.2251803

Tang, L., & Sun, S. (2022). Fiscal incentives, financial support for agriculture, and urban-rural inequality. International Review of Financial Analysis, 80, 102057. https://doi.org/10.1016/j.irfa.2022.102057

Verawaty, G. M., Wasasusmiah, R., & Merina, C. I. (2021). Determinants of human development index in Indonesia. Proceedings of the International Conference on Industrial Engineering and Operations Management, 4199–4210.

Yusniar, R. (2019). Factors Analysis on Affecting Regional Inequality in South Sulawesi Province. East African Scholars Journal of Economics, Business and Management, 11, 9–13.