THE EFFECTS OF POVERTY LINE, PROVINCIAL MINIMUM WAGE RATE, LEVEL OF EDUCATION, AND PER CAPITA INCOME ON THE

POVERTY LEVEL IN INDONESIA

APPLIED SHARIA MACROECONOMY

Compiled by : IRMAYANTI ERYK LUFIAT NIAMU ROBBY SUPARNOTO

THE 11th

POST-GRADUATE PROGRAM MASTER OF ECONOMY SHARIA ECONOMY AND FINANCE YEAR SHARIA ECONOMY AND FINANCE PROGRAM TRISAK

THE EFFECTS OF POVERTY LINE, PROVINCIAL MINIMUM WAGE RATE, LEVEL OF EDUCATION, AND PER CAPITA INCOME ON THE POVERTY LEVEL IN INDONESIA ABSTRACT This paper is aimed to examine the relationship among the poverty line, provincial minimum wage rate, level of education, and per capita income that affecting the poverty level in Indonesia. The model proposed in this paper put the poverty level as a dependent variable, while the per capita income, provincial minimum wage rate, poverty line, and level of education as independent variables using the multiple linear regression method. The data used is the annual panel data from 2008 to 2010 in 33 provinces of Indonesia. The data used is a secondary data obtained from the Indonesian Statistics Center Bureau (BPS/Biro Pusat Statistik) and several other sources from various websites. The finding shows that the poverty line has a significant influence on the poverty level in the 33 provinces of Indonesia, while the provincial minimum wage rate, level of educationparticularly the 9 years compulsory education, and the per capita income have some insignificant influences on the poverty level in 33 provinces of Indonesia. KEYWORDS Poverty Level, Poverty Line, Provincial Minimum Wage Rate, Level of Education, Per capita Income. INTRODUCTION Background and the Aims of the Study Poverty is a persisten classic problem from time to time. Different policies and initiatives to alleviate poverty have been made by the government, but it persists. Based on the BPS data (2010), the number of poor citizen (citizen with monthly per capita expenditure below the poverty line) in Indonesia is around 31,02 million people (13,33 percent) per March 2010. This fact indicates that the initatives and policies taken to the day have not touched the root of the problem that becomes the factor causing the emergence and persistence of poverty in an area. Such condition will surely be a drag for the development efforts taken by the government. Up to this point, poverty alleviation is still a challenge that the government cannot respond well, although they have developed various models of financial support aimed to increase the financial capital for citizens. Many poverty-alleviation programs implemented by the government, for example, P2KP (Program Penganggulangan Kemiskinan Perkotaan/City Poverty Alleviation Program), PPMK (Program Pemberdayaan Masyarakat Kelurahan/Villagers Empowerment Program), Program Pinjaman Modal Usaha (Capital Loan Program) from various ministries, and other similar programs. However, those programs cannot significantly decreasing the number of poor people in Indonesia because poverty is a complex and multidimensional problem. M. Natsir (2008) stated that poverty alleviation initiatives must be conducted comprehensively, covering multiple aspects of life, and implemented coherently. Therefore, in handling the problem of poverty it is important to know and understand what factors affect, directly or indirectly, the poverty level of people in Indonesia are. Drawing from the background, this study is aimed to find and examine the effects of poverty line, provincial minimum wage rate, level of education, and per

capita income on the percentage of poor citizen in each province of Indonesia. Problems Statements The poverty levels in every province in Indonesia varied greatly. It is due to the uneven distribution of government initiatives in handling the problem of poverty in those provinces. Therefore, a further study concerning the factors that influence the poverty level in each province is needed to find out what are the factors that can be fostered to overcome the problem of poverty. One of the factors that affect the poverty level is the poverty line. Every change in the poverty line set might affect the percentage of poor people in an area. The next factor is the provincial minimum wage rate and per capita income that might foster the improvement of peoples welfare (or prosperity), which, in turn, can decrease the poverty level. Besides those two factors, the educational factor can also influence the poverty level. Poverty and education are strongly interrelated. Education can bring capabilities to develop through mastering various knowledge and skills. This, in turn, will increase the work productivity and the opportunities to get better jobs and welfare because the maximum income can be achieved when the economy reaches the fullest job opportunity. Based on the problems stated above, the research problem this study intended to answer is: How do the poverty line, provincial minimum wage rate, level of education, and per capita income, individually, affect the poverty level in 33 provinces of Indonesia in 2008-2010? Hypothesis In reference to the theoretical frameworks and empirical studies conducted on this field, the following hypotheses are proposed: 1. It is hypothesized that the poverty line variable in the 33 provinces has positive influence on the poverty level in the 33 provinces of Indonesia in 2008-2010. 2. It is hypothesized that the minimum wage rate variable in the 33 provinces has negative influence on the poverty level in the 33 provinces of Indonesia in 2008-2010. 3. It is hypothesized that the level of education variable in the 33 provinces has negative influence on the poverty level in the 33 provinces of Indonesia in 2008-2010. 4. It is hypothesized that the per capita income variable in the 33 provinces has negative influence on the poverty level in the 33 provinces of Indonesia in 2008-2010.

LITERARY REVIEW Per capita income Per capita income is the average income of citizens in a country. Per capita income is computed by dividing the national income of a country with the number of its citizen. Per capita income is often used as an indicator of development. Per capita income might provide an overview of the level of welfare (Lincon Arsyad, 1999). The higher someones income, the higher his ability to pay various tolls and taxes demanded by the government is. With a

high regional income, it is expected that the regional government of that area can handle the problem of poverty in the region properly. Regional Gross Domestic Product (RGDP/Produk Domestik Regional Bruto), according to the Statistics Center Bureau (BPS) is defined as the total value added by all business units in a given region or the total output of goods and services produced by all economy units in that region. RGDP of current price represents the value added of goods and services computed using price of each year, while RGDP of constant price represents the value of goods and services computed using the price of a given year; in this calculation, the year used as the basis of computation is 1993. RGDP of constant price is used to find the economic growth per year (Sadono Sukirno, 2005, 56). According to BPS, RGDP of current price is used to show how big the economic structure is and what role the economic sectors play. Gross Domestic Product (GDP), or Regional Gross Domestic Product (RGDP) in the regional level, is the total number of final goods and services produced by an economy in a given year and stated in the market price. Both GDP and RGDP is a global measurement, and is not a precise measurement of economic growth, because they cannot represent the real prosperity rate of people. The prosperity rate represented by the GDP and RGDP should have been savored by every citizen of the country or region. Per capita GDP/Per capita Income. Per capita GDP, or per capita RGDP in the regional level, can be used to measure the economic growth better, because they can represent the citizens prosperity more precisely than the GDP or RGDP. Per capita GDP both in the national level and regional level is the total of national GDP, or RGDP of a region, divided by the number of population of that country or region. This value can also be called average GDP or RGDP. The World Bank used Gross National Product (GNP), instead of GDP, to measure the economic growth of a country. This is computed by calculating the net income of the country and the foreign production factors in that country. Although per capita GDP or GNP are better measurements, they still cannot represent the populations welfare in exact measurement, because the average GDP does not represent the real economic welfare (prosperity) of every person in a country. The average GDP might be high, but in reality, there might be a citizen or a group of citizen who do not have income at all. Therefore, it is important to note the element of income distribution of a country. Considering the element of income distribution; a high per capita GDP or GNP with a more evenly distributed income will represent a better economic welfare than a high per capita income with an unevenly distributed income among the population. However, for the reason of simplification of measurement, per capita income is still a better measurement than the other measurement tools. A high GDP of a country may not represent an even distribution of income. The reality shows that peoples income in a country is not always evenly distributed; they tend to be the opposite. An unevenly distributed income will cause an inequality. The bigger the difference in the distribution of development cake is, the bigger the inequality of income distribution will be. Indonesia, as a developing country, also faces this problem. Measuring Income Distribution The economists generally distinguish two main measurements of income distribution; both are used for analytical and quantitative purposes, namely size distribution and functional distribution. Personal distribution of income or size

distribution of income is a measurement that directly calculates the total income received by each individual or familyusually, each individual is put in a sequence based on the income he/she receivesand divide the total population into several groups or size using the Kuznets Ratio. The method commonly used to analyze the statistics of personal income is the Lorenz Curve that shows the actual quantitative relationship between the percentage of income receiver and the percentage of total income they actually receive in a given period. The more the Lorenz Curve arches toward the horizontal axis, the worse the inequality rate of income distribution in that country is. Finally, to measure the degree of relative income inequality, we compute the ratio of the area between the diagonal line and the Lorenz Curve and divide it by the area of half square in which the Lorenz Curve are, which is known as the Gini Coefficient. The functional distribution or the income distribution per production factor focuses on the part of national income received by each production factor (land, work, and capital) by computing the percentage of total workforces income and compare it with the percentage of total income distributed in form of rent, interest, and profit, so that each production factor will receive their payment (income) based on their contribution to the national output. The important axioms or principles in measuring the distribution rate of other things beside the income are: anonymity, that the inequality measurement should not depend on who receive the higher income; independency scale, that the inequality measurement should not depend on the size of economy or of country; the principle of population independency, that the inequality measurement should not be based on the number of income receiver (the number of population); and the principle of transfer (Pigou-Daiton), that by assuming that all other income are constant, if we transfer some income from the wealth to the poor, we will have a new income distribution that are more evenly distributed. Minimum Wage Rate In the labor market, it is important to determine the amount of wage a company must pay its employees. The minimum wage act determines the lowest price of labor that must be paid. The main purpose of determining minimum wage is to satisfy the minimum standard of life, including the needs for health, efficiency, and welfare, of the workers. Minimum wage rate is an effort to alleviate the position of the low-income citizen, particularly the poor workers (Mankiw, 2006). The minimum wage policy in Indonesia is set on the Regulation of the Minister of Labor Number: Per-01/Men/1999 and the Labor Act No. 13, 2003. The minimum wage as stated in the Ministry Regulation Number: Per-01/Men/1999 concerning Minimum Wage is the lowest monthly wage consisting of salary and benefits. Benefits are an amount of payment received by the workers in a constant and regular manner, which are not related with the presence or achievement of particular performance. The aim of minimum wage implementation is to realize a proper income for workers. Among the things considered in determining the minimum wage rate includes the effort to improve the welfare of the workers without ignoring the companys productivity and development, and the consideration of the general economic condition. Education

In accordance with the Indonesian Republic Regulation Number 20, 2003 On Educational System, education is a deliberate and planned initiative to create a learning environment and process so that the students can actively develop their potentials to have strength in religious spiritual, self control, personality, intelligence, good behaviour, and to gain skills that they, the society, and the nation need. The aim of education is to develop the potentials of the students so that they can be a religious people, have good attitudes and behaviour, healthy and informed, capable, creative and independent, and can be a democratic and responsible citizen. In the effort to have a sustainable economic development, the sector of education plays a strategic role, particularly in fostering the accumulation of capital that can support the production process and other economic activities. By definition, as reported in World Commision on Environmental and Development, 1997 in McKeown (in Dian Satria, 2008), sustainable development is development that meets the needs of the present without comprimising the ability of future generations to meet their own needs. In this context, education is considered as a tool to achieve a sustainable target, because with education, the developmental activities can be done, so that the opportunity to increase the quality of future life will increase. On the other hand, with education, the efforts of greener development, focusing and considering environmental aspects, can be achieved more easily. Noone will argue that education is the pioneer in developing the future of a country. If the education of a country is poor, the destruction of that country will be just a matter of time. It is because education is related with the development of characters and the preservation of identity. Therefore, every country that wants to be developed must prioritize its education. A lot of poor people were systematically engaged in stupidity. It is important to understand that poverty can cause stupidity, and that stupidity is identical with poverty. Ironically, the education in Indonesia is always hampered by three realities (Winardi, 2010, at http://andalasvanjavaonline.com). First, the level of governments awareness or attention on the education is low. Education is considered inferior to the more strategic matter of politics. Education is even used as a political jargon to reach a position of power, to gain peoples sympathy. If we look at other countries, there is an evident concern about the condition of this human resource. Take the United States, for example, the minister for city affairs in the era of Bill Clinton, Henry Cisneros, once stated that he was concerned about the future of the United States with the large number of Hispanic and Africa-American who were illiterate and unproductive. According to Marshal (in Tulus TAmbunan, 1997), a country cannot have an international-level workforce if a quarter of its students failed to graduate from high schools. This is a simple but meaningful concern, because the Hispanic population was only one among various ethnics in the United States. In Indonesia, we can see that the education is ignored and neglected, and there is a tendency to put it aside in favor of other dimensions of development. Second, there is an invisible colonization in this era of globalization and capitalism. This covert colonization is done by the developed countries through the capital and politic dimensions which exploit the developing countries. Commonly, the colonization is closely related with economy. With the increasing national debt, the donating agencies and organizations can directly or indirectly intervene with the economic policy of a country. In effect, privatization emerges in every aspect and field of development, including education. When this

happens, the education becomes increasingly expensive that the people cannot afford it anymore. Thus, the people cannot have the higher education, which, in turn, will decrease the quality of the human resources in the country. It is no wonder that the Indonesian workforce is allocated in the informal sectors because they have low quality. And one of the factors causing this is the high cost of education. Moreover, we are amidst the global investment climate that requires the government to provide a legal framework to protect its people. The cheap labor is caused by the privatization (the autonomy of universities) which puts the education beyond peoples reach. In the end, an education system link up emerges, in which the education can only provide the low quality and low skills labor. The third is the condition of the people itself, which cannot adapt to the emerging environment and situation. It is of course closely related with the condition of this nation, which is trapped in a multidimensional crisis that causes the people to expect less from their lives. It can be said that there is a relative deprivation (an expression introduced by Karl Marx and fostered by Ted R. Gur) in the society. This will cause the lost of respect toward education, because people prioritizing their economical needs than education. The result is a growing illiteracy, and poverty will be a social reproduction. Poverty will give birth to an uneducated generation due to the lack of education. This generation will foster the poverty, and the cycle continues. Poverty In its proper sense, poverty is understood as a condition in which people are lack of money and property to survive. In a broader sense, Chambers (in Chriswardani Suryawati, 2005) stated that poverty is an integrated concept consisted of five dimensions: 1) poverty, 2) powerless, 3) state of emergency, 4) dependency, and 5) isolation, both geographically and sociologically. Live in poverty does not only mean live in the condition of lacking money and low income, but it also means other things, for example low level of health and education, inequality and injustice law, vulnerability towards criminality, powerlessness in determining ones live (Chriswardani Suryawati, 2005). Nasikun in Chriswardani Suryawati (2005) suggested several sources and process causing poverty: a. Policy induces processes, which is the preserved destitution process, reproduced through the implementation of policies, including the policies of anti-poverty which in reality preserves it. b. Socio-economic dualism, the former-colonized countries become poor due to the colonial production pattern, in which the farmers become marginal because the most fertile lands are owned by the large-scale exportoriented farmers. c. Population growth, a perspective drawing on Malthus theory, which stated that the population growth is like an exponential line while the food production is like a numerical line. d. Resources management and the environment are the element of mismanagement of the resources and environment; for example, the mismanagement of farming in which people cut trees and open land irresponsibly will decrease productivity. e. Natural cycle and processes; poverty happen due to natural cycle. For example, the critical land, in which when it rains there will be flood and when its dry there will be water problem, cannot allow a maximum and

sustainable productivity. f. The marginalization of woman because they are considered second-class citizen, so that the access to and reward of work performance is lower than those of males. g. Cultural and ethnic factors that preserve the poverty. For example, the consumptive pattern of the farmers and fishermen during the harvest season, and the consumptive tradition during the religious or traditional ceremonies. h. Exploitive intermediation; the existence of helper that turns out to be crook, for example, a loan shark. i. Internal political fragmentation and civil stratfe; a policy implemented in a region with strong political fragmentation might cause poverty. j. International processes; the work of international systems (colonialism and capitalism) causes many countries become poor. The definition of poverty has evolved and expanded, due to the more complex causing factors, indicators, and other problems related to it. Poverty is no longer a dimension of economy but has expanded to the dimensions of social, health, education, and politics. According to BPS, poverty is the inability to satisfy the minimum standard of basic needs, including the needs of food and non-food. It compares the peoples consumption rate with the poverty line or the total rupiah for consumption per month. The definition of poverty by UNDP in Cahyat (2004) is the inability to expand the choices of live, including considering the absence of participation in public policy making as an indicator of poverty. In essence, the definition of poverty can be seen from two sides: a) Absolute poverty Poverty that is related with the estimation of income and needs; those needs are limited only on the basic needs that allow people to live properly. Thus, poverty is measured by comparing the level of ones income with the level of income he/she needs to satisfy his/her basic needs, i.e. food, cloth, and housing for him/her to be able to survive. b) Relative poverty Poverty viewed from the aspect of social inequality, because there are people who are capable to satisfy their minimum (basic) needs but still lower than the people around them (their environment). The larger the inequality (discrepancy) of the life of higher income and lower income society is, the larger the number of people to be categorized as poor is. Therefore, the relative poverty is closely related with income distribution. Measuring Poverty To measure poverty, Indonesia through BPS uses the basic needs approach, which utilizing the head count index, i.e. the number and percentage of poor citizen who live below the poverty line. The poverty line is set in a constant and real rate so that we can decrease the poverty rate (level) by tracking the improvement we have made in alleviating poverty all this time. One of the ways to measure poverty used in Indonesia is bya measuring the degree of income inequality among the poor citizens, for example, the Gini

Coefficient among the poor people (GC) or Coefficient of Income Variation (CV) among poor people. Gini Coefficient or CV is important to know because the effect of economic turbulence on poverty may vary depending on the level and distribution of resources among the poor. The axioms or principles to measure poverty include: anonymity, independpency, which means that the measurement of poverty must not depend on who is poor or on whether the country has large or small population. Principle of monotenicity, which means that if we give some money to poor people, and assuming that other income is constant, then the poverty level cannot be higher than before. The principle of distributional sensitivity stated that if other things are constant, if we transfer income from the poor to the wealthy, the economy will be poorer. Two poverty indexes that are most commonly used because they satisfy the four criteria above are Send Index and Foster-Greer-Thorbecke Index (FGT) (P alpa). UNDP besides measuring poverty using the parameter of income in 1997 introduced the Human Poverty Indeks (HPI) or commonly known as Human Development Indeks (HDI), which stated that poverty must be measured in terms of three key deprivations, i.e. life, education, and economic stability. The effect of income on poverty Todaro (1997) stated that the varied poverty in developing countries is mainly caused by several factors: (1) geographical differences, total population, and level of income, (2) historical differences, some countries were colonized by others, (3) differences of natural resources and the quality of human resources, (4) differences of the roles of private and public sectors, (5) differences of industry structure, (6) differences of dependency on economy and politic strength of other country, and (7) differences on the distribution of power, politic and organizational structure. Economic development requires a higher national income, and to achieve that there must be a higher level of growth and development. However, the problem is not only how to foster growth, but also who has the right to implement and get the result. Kuncoro (2001) stated that the traditional development approach is translated into a development that focuses on increasing the RGDP of a province, residence, or city. Sadono Sukirno (2000) argued that the economic growth rate is the increase of RGDP, despite of whether the increase is higher or smaller. The economic development is not merely measured based on the growth of RGDP as a whole, but must also considering how far the income distribution went to the population and who has get the results. He argued that the RGDP of a region has an effect on the quality of family consumption. And if the income rate of the society is limited, many poor families will have to change their pattern of consumption to the cheapest goods, with decreasing amount. Kuznet (cited in Tulus Tambunan, 2001) stated that development and poverty has a strong correlation, because at the beginning of development process, the level of poverty tends to increase and at the end of the development process, the level of poverty will gradually diminish. The work of Deni stated that RGDP as the indicator of economic growth has a negative effect on poverty.

The effect of education on poverty

Todaro (1994) stated that for several years, most of the researches on economics, both in developed and developing countries, have focused on the relationships among the education, workforce productivity, and the level of output. It is not surprising because the main goal of development in 1950s and 1960s was to maximize the total growth of output. As the result, the effect of education on income distribution and the initiatives to alleviate absolute poverty were mostly forgotten. Then, Todaro (2000) argued that education is (or should be) the fundamental goal of development. Education plays a key role in shaping a countrys ability to absorb modern technology and to develop their capacity to create an sustainable growth and development. Gaiha (1993) argued that education plays an important role in ones welfare in different ways. Education can increase peoples abilities to obtain and use information, deepen their understanding on economics, expand their productivity, and provide options to them to take part as consumer, producer, or citizen. Besides, ones education and income distribution have a positive correlation with his/her income. This correlation is evident in someone who graduates from higher education (college and university), who will have income 300% to 800% higher than those who only finished part or whole elementary education. Since the level of education depends on the length of time spent to get education, the inequality of income will become greater. Simmons (cited in Todaro, 1994) stated that education in various countries is a way to save that country from poverty. He illustrated that a poor who expects a good job and high income must have a high level of education. However, the high level of education can only be obtained by the wealthy. The poor people do not have enough money to pay for higher education, such as college and university. Thus, the level of education has a big influence in alleviating poverty. In the research of Hermanto and Dwi, it is found that education has a high influence on poverty, compared to other development factors such as total population, RGDP, and inflation rate. PREVIOUS RESEARCH AND RELATED LITERATURE There are several researches and writings on the similar topic, but using different variables, including: Samsubar Saleh (2002) conducted a research to analyze the factors affecting the poverty level in each province in Indonesia in 1996 and 1999. This period of time was choosen because the poverty levels in the each year of that period had equal standard of measurement. Another reason was to represent the condition before and after the monetary crisis in 1997 and 1998. This research used regression approach as its method with 2 (two) regression models: 1. Estimation model using cross-section data. 2. Estimation model using pooled data. This research concluded that the factors affecting the poverty level in each province in Indonesia were the human development index (consisted of per capita income, life expectancy rate, average schooling rate), physical investment of regional government, income disparity (inequality) rate, economic and political participation of women, population without access to health facilities, population without access to clean water, and economy crisis. Ted K. Bradshaw (2005) wrote Theories of Poverty and Anti-Poverty Program in Community Development. This work discussed 5 theories about the factors causing poverty, i.e. Individual, Cultural, Politic-Economy Structure, Geography, and Combined Factors. It also proposed some suggestions that can be implemented by a community to decrease the poverty level in that

community. Ravi Dwi Wijayanto (2010) conducted a research to analyze the effects of RGDP, education, and unemployment on the poverty level in several regencies in Central Java in 2005 to 2008. The finding of the research shows that for the regencies/cities in Central Java, the variable of RGDP has a negative effect and insignificantly affecting the poverty level, the variable of education (literacy) has a negative effect and significantly affecting the poverty level, the variable of unemployment has a negative effect and significantly affecting the poverty level. Adit Agus Prastyo (2010) conducted a research to analyze the factors affecting the poverty level in 35 regencies/cities in Central Java in 2003-2007. The findings of the research are: the dependent variable, which is the poverty level, is best explained by the independent variables, i.e. economic growth, minimum wage rate, education, and level of unemployment. All independent variables in the regression model, i.e. the economic growth, minimum wage rate, education, and level of unemployment, and the regional dummy, together, influence the variable of poverty level in Central Java in 2003-2007. For provide a clearer picture, the findings of the previous researchers and writers stated above are outlined in the following table: Writer Samsubar Saleh Dependent Variable Poverty level per province Independent Variable Human development index, physical investment of regional government, the income inequality rate, the economic and politic participation of women, population without access to health facilities, and population without access to clean water, and economic crisis Individual, Cultural, Struktur PoliticEconomy Structure, Geography, and Combined RGDP, education, and unemployment Finding All variables have significant effect

Ted K. Bradshaw

Poverty

All variables have significant effect Have effect but not significant, Have significant effect, Have significant effect All variables have significant effect

Ravi Dwi Wijayanto

Poverty level

Adit Agus Prastyo

Poverty Level

Economic growth, minimum wage rate, education, unemployment rate, and regional dummy

DATA AND METHODOLOGY

The data used in this study is secondary data, which is the data that are not collected by the researchers. The secondary data used are time-series data for the period of 2008-2010 and cross-section data of 33 provinces of Indonesia. The data in this study is obtained from Statistical Center Bureau and other information is gained from literary study of scientific journals and textbooks. To process the data, we need to develop the model to be used. Based on the description of the variables on the previous parts, we formulated the model of poverty regression formula as follows:
LVL_POVERTYit = 0 + 1 POVERTY_LINEit + 2 PMWRit + 3 LVL_EDUCATIONit + 4 PERCAPITA_INCOMEit + eit

unit i

In which: LVL_POVERTY : Poverty Level POVERTY_LINE : Poverty Line PMWR : Provincial Minimum Wage Rate LVL_EDUCATION : Level of Education PERCAPITA_INCOME : Per capita Income 0 : Constant 1, 2, 3, 4 : Regression coefficient eit : error component on time t for the cross-section i : 1, 2, 3, .. 33 (cross-section data of provinces : 1, 2, 3, 4 (time-series data, year 2008-2010)

in Indonesia) t This study used the analysis of pooled data as data processing tool using the Eviews 7 software. The analysis using pooled data is a combination of timeseries data and cross-section data. In doing regression on the pooled data, we use three (3) models of regression: Common Effect, Fixed Effect, and Random Effect. Then, we conducted the Effect Test using the Chow Test and Housman Test to examine the stability of the model used. FINDINGS AND DISCUSSION In this study, we use a pooled data, in which we use the following independent variables: poverty line, PMWR, level of education, per capita income. Meanwhile, the dependent variable used in this model is the percentage of poor citizen from each province in Indonesia. This model assumes that the percentage of poor citizen (or percentage of poverty level) is influenced by the poverty line, PMWR, level of education, and per capita income. In doing regression on the pooled data, we use three (3) models of regression: Pool (Common Effect), Fixed Effect, and Random Effect. After the regression of the three models, we conducted the Effect Test using the Chow Test and Housman Test. This test is needed to examine the stability of the model used. Redundant Fixed Effects Tests Pool: POOR_REGRESSION1 Test cross-section fixed effects

Effects Test Cross-section F Cross-section Chi-square

Statistic 8.738815 168.956292

d.f.

Prob.

(32,62) 0.0000 320.0000

Cross-section fixed effects test equation: Dependent Variable: LVL_POVERTY? Method: Panel Least Squares Date: 01/01/12 Time: 22:11 Sample: 2008 2010 Included observations: 3 Cross-sections included: 33 Total pool (balanced) observations: 99 Variable C POVERTY LINE? PMWR? LVL_EDUCATION? PERCAPITA_INCOM E? R-squared Adjusted Rsquared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) Coefficient -21.09386 -4.37E-06 1.99E-05 0.265928 -0.267253 0.164426 0.128869 7.712367 5591.177 -340.1493 4.624370 0.001880 Std. Error t-Statistic Prob.

14.43955 -1.460839 0.1474 2.58E-05 -0.1697180.8656 5.89E-06 3.375780 0.0011 0.167842 1.584391 0.1165 0.123050 -2.171914 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat 0.0324 15.25909 8.263157 6.972712 7.103779 7.025742 0.561753

Based on the Chow Test, it is found that the result of Prob. Cross section Chi square 0,0000 and Prob. F Test 0,0000 significant < 0,05 so that the Hypothesis Ho is denied, and the Hypothesis Ha is accepted. Therefore, the model is following the Fixed Effect model. The result of the Housman Test is:

Correlated Random Effects - Hausman Test Pool: POOR_REGRESSION1 Test cross-section random effects Test Summary Cross-section random Chi-Sq. Statistic Chi-Sq. d.f. 16.193048 4 Prob. 0.0028

Cross-section random effects test comparisons:

Variable POVERTY LINE?

Fixed

Random -0.000037 0.000005 0.208003 -0.062171

Var(Diff.) Prob. 0.000000 0.2726

0.000047 PMWR? 0.000006 LVL_EDUCATION? 0.164948 PERCAPITA_INCOM E? 0.316337

0.0000000.0170 0.216006 0.9262 0.824264 0.7795

Cross-section random effects test equation: Dependent Variable: LVL_POVERTY? Method: Panel Least Squares Date: 01/01/12 Time: 22:14 Sample: 2008 2010 Included observations: 3 Cross-sections included: 33 Total pool (balanced) observations: 99 Variable Coefficien t Std. Error t-Statistic Prob.

C 18.54615 POVERTY LINE? -4.69E-05 PMWR? -6.12E-06 LVL_EDUCATION? 0.164948 PERCAPITA_INCOM E? 0.316337

43.03143 0.430991 0.6680 2.18E-05 -2.1549360.0351 7.32E-06 -0.835869 0.4064 0.517942 0.318468 0.7512 0.922004 -0.343097 0.7327

Effects Specification Cross-section fixed (dummy variables) R-squared Adjusted Rsquared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.848363 0.760316 4.045442 1014.667 255.6711 9.635305 0.000000 Mean dependent var 15.25909 S.D. dependent var Akaike info criterion Schwarz criterion 8.263157 5.912548 6.882441

Hannan-Quinn criter. 6.304968 Durbin-Watson stat 2.286313

Based on the Housman Test, the result of Prob. Cross section random is 0,0028 significant < 0,05 so that the Hypothesis Ho is denied, and the Hypothesis Ha is accepted. Therefore, the model is following the Fixed Effect model. The result of Fixed Effect is: Dependent Variable: LVL_POVERTY? Method: Pooled Least Squares Date: 01/01/12 Time: 22:09 Sample: 2008 2010 Included observations: 3

Cross-sections included: 33 Total pool (balanced) observations: 99 Variable C POVERTY LINE? PMWR? LVL_EDUCATION? PERCAPITA_INCOM E? Fixed Effects (Cross) _ACEH--C _SUMUT--C _SUMBAR--C _RIAU--C _JAMBI--C _SUMSEL--C _BENGKULU--C _BABEL--C _KEPRI--C _LAMPUNG--C _JAKARTA--C _JABAR--C _BANTEN--C _JATENG--C _YOGYAKARTA--C _JATIM--C _BALI--C _NTB--C _NTT--C _KALBAR--C _KALTENG--C _KALSEL--C _KALTIM--C _SULUT--C _SULTENG--C _SULSEL--C _SULTRA--C _SULBAR--C _GORONTALO--C _MALUKU--C _MALUT--C _PABAR--C _PAPUA--C Coefficient Std. Error t-Statistic Prob.

18.54615 43.03143 0.430991 0.6680 -4.69E-05 2.18E-05 -2.1549360.0351 -6.12E-06 7.32E-06 -0.835869 0.4064 0.164948 0.517942 0.318468 0.7512 -0.316337 0.922004 -0.343097 9.791853 -5.802920 -9.441256 -6.936011 1.872001 -1.882435 -13.18448 24.86858 9.862178 -8.877189 -3.511630 -0.611500 0.468835 -7.072008 0.816199 0.645750 -9.733216 -9.761943 4.641562 4.580790 -4.597377 12.79553 18.90936 20.73431 -7.529112 -2.333164 -4.635802 0.036677 1.931836 -5.750957 -5.004568 0.853480 -6.143370 Effects Specification 0.7327

Cross-section fixed (dummy variables) R-squared Adjusted RMean dependent 0.848363 var 15.25909 0.760316 S.D. dependent var 8.263157

squared Akaike info S.E. of regression 4.045442 criterion Sum squared resid 1014.667 Schwarz criterion Hannan-Quinn Log likelihood -255.6711 criter. Durbin-Watson F-statistic 9.635305 stat Prob(F-statistic) 0.000000 5.912548 6.882441 6.304968 2.286313

Goodness of Fit The data analysis shows the Goodness of fit model (R2) = 0,848363, which means that the model can explain the influence (effects) of the independent variables on the dependent variable by 84,84 %, while the remaining 15,16 % is the influence of other independent variabes which are not included in the model. It indicates the complexity of the problems that affect the dependent variable, or the existence of other independent variables which significantly affecting the dependent variable, but are not included in the model.

Interpretation of the Fixed Effect Model Variables The variable of poverty line has a negative effect, which is contrary to the hypothesis. The Prob of the poverty line variable: 0,0351 < 0,05 which means it significantly affects the percentage of poverty level. Using a ceteris paribus assumption, it indicates that for every 1 % increase of poverty line, the percentage of poor population will decrease by 4.69E-05 %, which is contrary to the hypothesis. The reason for this difference lays on the mechanism used to set the poverty line, because by theory, if the poverty line is increasing, the percentage of poor population will also increase. It indicates that there are other variables affecting this result, or there are variables of motives in setting the poverty line resulting in the trend of decreasing poverty level each year for the period of time that we examine. The variable of PMWR has a negative effect, which is in line with the hypothesis. However, the Prob of the PMWR: 0,4064 > 0,05 which means it does not significantly affect the percentage of poverty level. The hypothesis stated that the variable of PMWR has a negative effect on the percentage of poverty level so that each increasing of PMWR might cause a decrease in the percentage of the poverty level. This insignificant effect might be explained as: Cummulatively, the percentage of poverty level is computed based on the percentage of the population living below the poverty line, meanwhile the poverty line is set based on the per capita income. It indicates there is an inequality of income distribution among a population or, in other words, the increasing of PMWR does not necessarily equal with the increasing of the percentage of population, who have a below-poverty-line income. The variable of level of education (the schools participation rate), which used the assumption of the school participation rate that people has an education opportunity in accordance with the governments program (9-years compulsory education), has a positive effects. This is contrary with the hypothesis. The Prob of the level of education variable is: 0,7512 > 0,05, which means that it does not significantly affect the poverty level. This is different from what has been expected, that the variable of schools participation rate has a negative effect of the percentage of poverty level, so that every increase of

schools participation rate may cause a decrease in the percentage of poverty level. It indicates that the percentage of the school participation rate used cannot fully explain the output percentage, or, in other words, it only explains the rate of participation. It also indicates that with the increase in the school participation rate, the expense needs will also increase, meanwhile on the other hand, the income does not increase. In other words, the increase in the needs of expense resulting from the increase of schools participation rate is not equal with (less than) the even distribution of income. This result also shows that the 9 year compulsory education program implemented by the government is not fully effective. It might even be contraproductive in the context of poverty alleviation initiatives, even if the education sector has a large budgetary allocation and is supported by various programs like BOS (Bantuan Operational Sekolah/School Operational Grant). The variable of per capita income has a negative effect, which is in line with the hypothesis. However, the Prob of this variable: 0,7327 > 0,05, indicating that its effect on the percentage of poverty level is not significant. It also indicates that the increase in per capita income is not evenly distributed so that it does not show a significant influence toward decreasing the percentage of poverty level. CONCLUSIONS The final estimated model used in this study is using Fixed Effect, by which, based on the empirical findings, the following conclusions are derived: - All independent variables examined (poverty line, PMWR, level of education, and percapita income), together, have influence on the poverty level for each province in Indonesia. - Individually, the variable of poverty line has a significant correlation with the poverty level. - Individually, the variables of PMWR, level of education, and per capita income, has no significant correlation with the poverty level. Suggestions Among many things that can be used as consideration and apllied in the policies are: - Improvement of the quality and development of society through the improvement of income, education, and health, while at the same time, an even distribution of income is pursued through providing even distribution (equal opportunities) of work opportunities or vocations. - Particular to the educational sector, specifically the 9 years compulsory education, the effectiveness of the supporting programs, such as scholarships or Schools Operational Grant programs, needs to be improved so that the programs can be properly given in the context of both central policies and regional otonomy systems. However, the effects might not significantly decrease the poverty level because there are indications of dependency towards other factors, like unemployment and the availability of income-producing jobs. SUGGESTIONS 1. To gain a more comprehensive findings; future studies might use a longer time series data to obtain a more specific data. It is particularly useful if the studies are aimed to find out the effects of independent variables on

the dependent variables of this study in every province in Indonesia. 2. The model developed in this study is limited because it only considers the effects of the variables of poverty line, provincial minimum wage rate (PMWR), level of schools participation (education), and per capita income. REFERENCES 1. Bank Indonesia, Statistik Perbankan Indonesia. September 2010. diakes di http://www.bi.go.id/web/id/Statistik/Statistik+Perbankan/Statistik+Perbank an+Indonesia/ 2. Adiwarman Z. Karim, Segmentasi Pasar Perbankan Syariah, diakses di : http://permodalanbmt.com/bmtcenter/?p=816, Tanggal : 10/10/2010, Pukul : 07.19 WIB. 3. Dadang Romansyah, Penentuan Rate Bagi Hasil Deposito Mudharabah Bank Syariah di Indonesia (Analisis Teori dan Praktik), disampaikan pada acara: MES GOES TO CAMPUS National Seminar on Islamic Banking Research Aula Universitas Paramadina, 30 Juli 2009. 4. Rudiger Dornbusch, Stanley Fischer, Richard Strartz, Macroeconomics, 7th Editions, Irwin McGraw-Hill,1998,page 32. 5. Bank Indonesia. diakses: http://www.bi.go.id/web/id/Moneter/Inflasi/Pengenalan +Inflasi/ 6. Dornbusch. Op cit, page 34. 7. Adwin S. Atmadja, INFLASI DI INDONESIA : SUMBER-SUMBER PENYEBAB DAN PENGENDALIANNYA, Jurnal Akuntansi dan Keuangan Vol. 1, No. 1, Mei 1999 : 54-67 8. Bank Indonesia, diakses di: http://www.bi.go.id/web/id/Moneter/Kerangka+ Kebijakan+Moneter/ 9. Muhammad Syafii Antonio, Bank Syariah : Dari Teori ke Praktek, Jakarta: Gema Insani Press, 2001. hal 95. 10.Dewan Syariah Nasional MUI, diakses di http://www.mui.or.id/index.php? option =com_docman&task=doc_details&gid=11&Itemid=90 11.Patria Yunita, Pengaruh Suku Bunga SBI, Tingkat Inflasi, Kurs USD terhadap Kinerja Penghimpunan Dana Pihak Ketiga Perbankan Syariah, Tesis, Ekonomi dan Keuangan Syariah, Program Studi Timur Tengah dan Islam, Pasca Sarjana Universitas Indonesia, 2007. 12.Rahmatina A. Kasri and Salina Hj. Kassim, Empirical Determinants of Saving in The Islamic Banks: Evidence From Indonesia, J.KAU: Islamic Econ., Vol. 22 No. 2, pp: 3-23 (2009 A.D./1430 A.H.), Electronic copy available at: http://ssrn.com/abstract=1685226 13.Ronny Pramulia, Pengaruh Suku Bunga, Nilai Tukar Rupiah, Inflasi dan IHSG terhadap Deposito Perbankan Syariah, Tesis, Ekonomi dan Keuangan Syariah, Program Studi Timur Tengah dan Islam, Pasca Sarjana Universitas Indonesia, 2009. 14.Aryanto Yudho, Analisis Faktor-Faktor Yang Mempengaruhi Deposito Mudharabah Bank Syariah di Indonesia Thun 2002.1 2009.12, Tesis, FAKULTAS EKONOMI PROGRAM MAGISTER PERENCANAAN DAN KEBIJAKAN PUBLIK UNIVERSITAS INDONESIA, Jakarta, 2010. 15.Biro Pusat Statistik, diakses di : http://www.bps.go.id/aboutus.php?tabel= 1&id_subyek=03 16.Robert S. Pyndick, Daniel L. Rubinfeld, Econometric Models and Economic Forecasts, 4th Ed, McGraw-Hill, 1998. Page 159. 17.Arsyad, Lincoln. 1999. Ekonomi Pembangunan, Edisi Keempat. Yogyakarta : BP STIE YKPN

18.Criswardani Suryawati, 2005. Memahami Multidimensional. online.net/Volume_8/Vol_08_No_03_2005.pdf.

Kemiskinan Secara http://www.jmpk-

19.Dian Satria, 2008. Modal Manusia Dan Globalisasi: Peran Subsidi Pendidikan. http://www.diassatria.web.id/wpcontent/uploads/2008/12/jurnalindef-subsidi.pdf 20.Gujarati, Damodar, (1993) Ekonomi dasar. Cetakan ke 3, penerbit Erlangga Jakarta 21.Jhingan, M.L. (1993) ekonomi pembangunan dan perencanaan, cetakan ke 4, raja Grafindo Persada Jakarta 22.Mankiw, Gregory, 2006, Pengantar Ekonomi Mikro, Edisi Penerjemah : Chriswan Sungkono, Salemba Empat, Jakarta. Ketiga,

23.Tambunan, Tulus TH, (1996). Perekonomian Indonesia, Cetakan pertama Ghalia Indonesia, Jakarta. 24.Todaro, Michel P, (1981) Economic development in The Third World, Second edition, published in the USA by Logman Inc. New York.

Appendix 1
COMMON EFFECT Dependent Variable: LVL_POVERTY Method: Pooled Least Squares Date: 01/01/12 Time: 22:56 Sample: 2008 2010 Included observations: 3 Cross-sections included: 33 Total pool (balanced) observations: 99

Variable C POVERTY LINE? PMWR? LVL_EDUCATION? PERCAPITA_INCOME ?

Coefficient -21.09386 -4.37E-06 1.99E-05 0.265928 -0.267253

Std. Error 14.43955 2.58E-05 5.89E-06 0.167842 0.123050

t-Statistic

Prob.

-1.460839 0.1474 -0.169718 0.8656 3.375780 0.0011 1.584391 0.1165 -2.171914 0.0324 15.25909 8.263157 6.972712 7.103779 7.025742 0.561753

R-squared 0.164426 Adjusted R-squared 0.128869 S.E. of regression 7.712367 Sum squared resid 5591.177 Log likelihood -340.1493 F-statistic 4.624370 Prob(F-statistic) 0.001880

Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat

Appendix 2
FIXED EFFECT Dependent Variable: LVL_POVERTY? Method: Pooled Least Squares Date: 01/01/12 Time: 22:09 Sample: 2008 2010 Included observations: 3 Cross-sections included: 33 Total pool (balanced) observations: 99 Variable C POVERTY LINE? PMWR? LVL_EDUCATION? PERCAPITA_INCOME ? Fixed Effects (Cross) _ACEH--C _SUMUT--C _SUMBAR--C _RIAU--C _JAMBI--C _SUMSEL--C _BENGKULU--C _BABEL--C _KEPRI--C _LAMPUNG--C _JAKARTA--C _JABAR--C _BANTEN--C _JATENG--C _YOGYAKARTA--C _JATIM--C _BALI--C _NTB--C _NTT--C _KALBAR--C _KALTENG--C _KALSEL--C _KALTIM--C Coefficient 18.54615 -4.69E-05 -6.12E-06 0.164948 -0.316337 9.791853 -5.802920 -9.441256 -6.936011 1.872001 -1.882435 -13.18448 24.86858 9.862178 -8.877189 -3.511630 -0.611500 0.468835 -7.072008 0.816199 0.645750 -9.733216 -9.761943 4.641562 4.580790 -4.597377 12.79553 18.90936 Std. Error 43.03143 2.18E-05 7.32E-06 0.517942 0.922004 t-Statistic Prob.

0.430991 0.6680 -2.154936 0.0351 -0.835869 0.4064 0.318468 0.7512 -0.343097 0.7327

_SULUT--C _SULTENG--C _SULSEL--C _SULTRA--C _SULBAR--C _GORONTALO--C _MALUKU--C _MALUT--C _PABAR--C _PAPUA--C

20.73431 -7.529112 -2.333164 -4.635802 0.036677 1.931836 -5.750957 -5.004568 0.853480 -6.143370 Effects Specification

Cross-section fixed (dummy variables) R-squared 0.848363 Adjusted R-squared 0.760316 S.E. of regression 4.045442 Sum squared resid 1014.667 Log likelihood -255.6711 F-statistic 9.635305 Prob(F-statistic) 0.000000 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat 15.25909 8.263157 5.912548 6.882441 6.304968 2.286313

Appendix 3
RANDOM EFFECT Method: Pooled EGLS (Cross-section random effects) Dependent Variable: LVL_POVERTY? Date: 01/01/12 Time: 22:10 Sample: 2008 2010 Included observations: 3 Cross-sections included: 33 Total pool (balanced) observations: 99 Swamy and Arora estimator of component variances Variable C POVERTY LINE? PMWR? LVL_EDUCATION? PERCAPITA_INCOME ? Random Effects (Cross) _ACEH--C _SUMUT--C _SUMBAR--C _RIAU--C _JAMBI--C _SUMSEL--C _BENGKULU--C _BABEL--C _KEPRI--C _LAMPUNG--C _JAKARTA--C _JABAR--C _BANTEN--C _JATENG--C _YOGYAKARTA--C _JATIM--C _BALI--C _NTB--C _NTT--C Coefficient 1.144160 -3.72E-05 5.21E-06 0.208003 -0.062171 4.750415 -5.664482 -7.433875 -6.441186 3.533827 2.052334 -8.911109 11.45808 9.779029 -4.416384 -1.393134 1.733636 -0.079838 -6.379715 -6.280932 -4.411150 -6.089892 -6.242597 5.941299 Std. Error 19.09949 1.99E-05 5.57E-06 0.228601 0.160709 t-Statistic Prob.

0.059905 0.9524 -1.870154 0.0646 0.934238 0.3526 0.909893 0.3652 -0.386853 0.6997

_KALBAR--C _KALTENG--C _KALSEL--C _KALTIM--C _SULUT--C _SULTENG--C _SULSEL--C _SULTRA--C _SULBAR--C _GORONTALO--C _MALUKU--C _MALUT--C _PABAR--C _PAPUA--C

5.473584 -0.916509 7.116610 13.21268 18.47304 -5.192956 -1.136433 -2.114066 1.853605 1.220695 -5.534335 -4.269780 -0.069516 -3.620946 Effects Specification S.D. Rho

Cross-section random Idiosyncratic random Weighted Statistics R-squared Adjusted R-squared S.E. of regression F-statistic Prob(F-statistic) 0.042843 0.002113 4.299818 1.051873 0.384858

6.393344 0.7141 4.045442 0.2859

Mean dependent var S.D. dependent var Sum squared resid Durbin-Watson stat

5.236036 4.304367 1737.913 1.399559

Unweighted Statistics R-squared Sum squared resid 0.025406 6521.419 Mean dependent var 15.25909 Durbin-Watson stat 0.372973

Appendix 4
CHOW TEST Redundant Fixed Effects Tests Pool: POOR_REGRESSION1 Test cross-section fixed effects Effects Test Cross-section F Cross-section Chi-square Statistic 8.738815 168.95629 2 d.f. (32,62) Prob. 0.0000

32 0.0000

Cross-section fixed effects test equation: Dependent Variable: LVL_POVERTY? Method: Panel Least Squares Date: 01/01/12 Time: 22:11 Sample: 2008 2010 Included observations: 3 Cross-sections included: 33 Total pool (balanced) observations: 99 Variable C POVERTY LINE? PMWR? LVL_EDUCATION? PERCAPITA_INCOME ? R-squared Adjusted R-squared Coefficient -21.09386 -4.37E-06 1.99E-05 0.265928 -0.267253 0.164426 0.128869 Std. Error 14.43955 2.58E-05 5.89E-06 0.167842 0.123050 t-Statistic Prob.

-1.460839 0.1474 -0.169718 0.8656 3.375780 0.0011 1.584391 0.1165 -2.171914 0.0324

Mean dependent var 15.25909 S.D. dependent var 8.263157

S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic)

7.712367 5591.177 -340.1493 4.624370 0.001880

Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat

6.972712 7.103779 7.025742 0.561753

Appendix 5
HAUSMAN TEST Correlated Random Effects - Hausman Test Pool: POOR_REGRESSION1 Test cross-section random effects Test Summary Cross-section random Chi-Sq. Statistic Chi-Sq. d.f. 16.193048 4 Prob. 0.0028

Cross-section random effects test comparisons: Variable POVERTY LINE PMWR LVL_EDUCATION PER CAPITA INCOME Fixed -0.000047 -0.000006 0.164948 -0.316337 Random -0.000037 0.000005 0.208003 -0.062171 Var(Diff.) Prob. 0.000000 0.2726 0.000000 0.0170 0.216006 0.9262 0.824264 0.7795

Cross-section random effects test equation: Dependent Variable: TKT_MISKIN? Method: Panel Least Squares Date: 01/01/12 Time: 22:14 Sample: 2008 2010 Included observations: 3 Cross-sections included: 33 Total pool (balanced) observations: 99 Variable C POVERTY LINE PMWR LVL_EDUCATION PER CAPITA INCOME Coefficient 18.54615 -4.69E-05 -6.12E-06 0.164948 -0.316337 Std. Error 43.03143 2.18E-05 7.32E-06 0.517942 0.922004 t-Statistic Prob.

0.430991 0.6680 -2.154936 0.0351 -0.835869 0.4064 0.318468 0.7512 -0.343097 0.7327

Effects Specification Cross-section fixed (dummy variables) R-squared 0.848363 Adjusted R-squared 0.760316 S.E. of regression 4.045442 Sum squared resid 1014.667 Log likelihood -255.6711 F-statistic 9.635305 Prob(F-statistic) 0.000000 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat 15.25909 8.263157 5.912548 6.882441 6.304968 2.286313

Appendix 6
Province ACEH ACEH ACEH BABEL BABEL BABEL BALI BALI BALI BANTEN BANTEN BANTEN BENGKULU BENGKULU BENGKULU GORONTALO GORONTALO GORONTALO JABAR JABAR JABAR JAKARTA JAKARTA JAKARTA JAMBI JAMBI JAMBI JATENG JATENG JATENG JATIM JATIM JATIM KALBAR KALBAR KALBAR KALSEL KALSEL KALSEL KALTENG Year 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 Poverty Level (%) 23,53 21,80 20,98 6,17 5,13 4,88 8,58 7,46 6,51 8,15 7,64 7,16 20,64 18,59 18,30 18,32 17,23 16,83 4,29 3,62 3,48 24,88 25,01 23,19 35,12 35,71 8,34 9,32 8,77 11,27 13,01 11,96 16,56 19,23 17,72 15,26 18,51 16,68 9,02 11,07 Poverty Line (Rupiah) 239.873 261.898 278.389 246.169 266.843 286.334 176.569 196.466 208.152 181.076 198.750 208.023 189.607 210.084 225.857 147.154 162.189 171.371 176.216 191.985 201.138 290.268 316.936 331.169 182.229 199.623 216.187 168.168 182.515 192.435 169.112 188.317 199.327 158.834 174.617 189.407 180.263 195.787 210.850 186.003 PMW (Rupiah) 1.000.000 1.200.000 1.300.000 813.000 850.000 910.000 737.000 760.000 829.316 837.000 917.500 955.300 683.528 735.000 780.000 600.000 675.000 710.000 568.193 628.191 671.500 972.604 1.069.865 1.118.009 724.000 800.000 900.000 547.000 575.000 660.000 805.500 570.000 630.000 645.000 705.000 741.000 825.000 930.000 1.024.500 765.868 Schools Participatio n 13-15 (%) 94,15 94,31 94,99 79,71 79,98 80,59 88,07 88,43 89,26 81,28 80,86 81,70 87,42 87,47 88,25 77,68 80,94 81,78 81,00 81,85 82,73 90,53 90,75 91,45 84,78 85,10 85,56 84,27 84,59 85,33 86,54 88,00 88,82 84,50 83,92 84,48 79,68 79,83 80,59 86,42 7,86 7,36 8,82 9,02 8,88 7,38 7,68 7,42 8,30 8,53 8,31 4,33 4,53 4,86 2,59 2,75 2,80 7,08 7,25 8,03 39,87 41,60 41,20 5,45 5,69 5,65 5,21 5,46 5,77 8,49 8,88 9,92 5,94 6,12 6,89 8,12 8,42 8,46 7,22 Per Capita Income (Million Rp) 8,35

KALTENG KALTENG KALTIM KALTIM KALTIM KEPRI KEPRI KEPRI LAMPUNG LAMPUNG LAMPUNG MALUKU MALUKU MALUKU MALUT MALUT MALUT NTB NTB NTB NTT NTT NTT PABAR PABAR PABAR PAPUA PAPUA PAPUA RIAU RIAU RIAU SULBAR SULBAR SULBAR SULSEL SULSEL SULSEL SULTENG SULTENG SULTENG SULTRA SULTRA SULTRA SULUT

2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008

9,30 5,21 6,48 5,12 6,77 8,71 7,02 7,66 9,51 7,73 8,05 9,18 8,27 18,94 20,98 20,22 27,74 29,66 28,23 9,42 11,28 10,36 21,55 23,81 22,78 23,03 25,65 23,31 36,80 37,08 37,53 34,88 10,63 9,48 8,65 16,73 15,29 13,58 13,34 12,31 11,60 20,75 18,98 18,07 19,53

202.612 215.466 237.979 261.185 285.218 262.232 283.965 295.095 172.332 188.812 202.414 188.931 207.771 226 187.671 201.500 212.982 167.536 185.025 196.185 139.731 156.191 175.308 233.570 277.416 294.727 225.195 246.225 259.128 229.371 246.481 256.112 146.492 163.224 171.356 138.334 153.715 163.089 168.025 189.653 203.237 141.919 161.583 165.208 168.160

873.089 986.500 815.000 955.000 1.002.000 833.000 892.000 925.000 617.000 691.000 767.500 700.000 775.000 840.000 700.000 770.000 847.000 730.000 832.500 890.775 650.000 725.000 800.000 1.105.500 1.180.000 1.210.000 1.105.500 1.216.100 1.316.500 800.000 901.600 1.016.000 760.500 909.400 944.200 760.500 909.400 944.200 670.000 720.000 777.500 700.000 770.000 860.000 845.000

86,64 86,83 90,78 91,55 92,49 91,10 91,26 92,16 85,10 85,92 86,62 91,20 91,98 92,85 89,20 90,02 90,76 85,57 85,81 86,52 77,76 79,28 81,24 88,55 88,59 89,95 78,22 73,68 74,35 91,83 91,58 89,51 75,75 77,09 77,92 78,99 80,96 82,63 81,13 83,41 84,17 85,62 87,20 88,17 88,46 8,49 33,98 33,85 31,12 25,47 25,29 24,47 4,52 4,68 5,08 2,85 2,96 2,77 2,81 2,93 2,92 3,69 4,07 4,46 2,66 2,73 2,68 8,73 9,21 11,42 7,01 8,42 7,98 2,21 2,27 3,15 3,87 4,05 4,09 5,71 5,98 6,37 5,91 6,24 6,62 4,67 4,90 5,48 7,15

7,42

SULUT SULUT SUMBAR SUMBAR SUMBAR SUMSEL SUMSEL SUMSEL SUMUT SUMUT SUMUT YOGYA YOGYA YOGYA

2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010 2008 2009 2010

18,93 17,05 10,10 9,79 9,10 10,67 9,54 9,50 17,73 16,28 15,47 12,55 11,51 11,31

184.772 194.334 195.733 217.469 230.823 196.452 212.381 221.687 193.321 210.241 222.898 194.830 211.978 224.258

925.500 990.000 800.000 880.000 950.000 743.000 824.730 927.000 822.205 905.000 965.000 586.000 700.000 745.695

88,40 89,06 88,70 88,79 92,26 84,55 84,65 84,65 91,10 91,43 92,26 92,91 93,42 94,02

7,62 8,09 7,85 8,14 8,02 8,19 8,40 8,55 8,22 8,54 9,14 5,69 5,89 7,56