Poverty in Indonesia: An Application of Error Correction Model (ECM) Approach

Teuku Fazil Muttaqin; Raja Masbar; Abd. Jamal

doi:10.56225/ijassh.v2i1.113

Authors

Teuku Fazil Muttaqin Department of Economics, Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh, Indonesia
Raja Masbar Department of Economics, Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh, Indonesia
Abd. Jamal Department of Economics, Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh, Indonesia

DOI:

https://doi.org/10.56225/ijassh.v2i1.113

Keywords:

poverty, unemployment, household per capita expenditures, ICT, error correction model

Abstract

Poverty is one of the biggest concerns of the Indonesian government currently towards achieving social welfare. Indonesia's poverty tends to experience a downward trend but has not yet reached its target. This study analyses the long-term and short-term effects of unemployment, household per capita expenditure and ICT on poverty. This study uses panel data with the ECM approach in 34 provinces in Indonesia from 2015 to 2021. The result indicated that unemployment does not affect poverty in the long and short term. Meanwhile, per capita, household spending, and ICT negatively affect poverty in Indonesia. The government's efforts to overcome unemployment have been reasonable because unemployment does not affect poverty. The government can control household per capita expenditure through socialization or household education to prioritise basic needs first to achieve prosperity. Increasing the reach of ICT development in Eastern Indonesia and areas where ICT facilities are inadequate increases ICT access, use and expertise in reducing poverty.

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