THE EFFECT OF HUMAN DEVELOPMENT INDEX AND UNEMPLOYMENT ON POVERTY IN INDONESIA 2018-2023

Abstract

Poverty remains a serious issue in Indonesia despite its declining trend in recent years. This study aims to examine the influence of the Human Development Index (HDI) and the unemployment rate on poverty levels in Indonesia from 2018 to 2023. The research utilizes panel data from 34 provinces and employs panel regression analysis using the Fixed Effect Model, selected through Chow and Hausman tests. The results show that HDI has a negative and significant effect on poverty, indicating that improvements in human development can reduce poverty. Conversely, the unemployment rate has a positive and significant effect, meaning that higher unemployment contributes to increased poverty levels. The high coefficient of determination indicates that the model explains most of the variation in poverty levels. These findings align with human development theory and structural poverty theory and can serve as a reference for poverty reduction policy formulation in Indonesia.