Investigating the Public Spending and Economical Growth on the Poverty Reduction in Indonesia

Poverty and income inequality are being one of the most challenging issues in many developing countries, including Indonesia. Considering the higher level of the poverty rate in Indonesia, the study about poverty reduction is crucial and currently under discussion in previous studies. Thus, this study is written to examine what is education and health budgets could be reducing the poverty rate in Indonesia. The study utilizes annual data gathered from the Central Bureau of Statistics over the 2007-2017 period and analyzed using panel data by assisting the Eviews-10. The empirical result finds that the budget allocated for education and health significantly reduce the poverty rate in Indonesia. Therefore, it is suggested that to further reduce the poverty level, the government should allocate more budget of education and health for the poor and there is a need to monitor the public service performance with the aim the allocation of expenditure can be more efficient and effective. Besides, it is necessary to increase the number of pro-poor programs such as free public health and education insurance to fulfill the basic needs of the poor.