Fiscal Decoupling? How Capital Expenditure Mediates the Impact of Intergovernmental Transfers on Poverty and Unemployment in Emerging Regions
DOI:
https://doi.org/10.58526/ezrasciencebulletin.v4i2.633Keywords:
Fiscal Decentralization, Poverty,, Unemployment, Capital Expenditure, Panel DataAbstract
This study aims to analyze the impact of fiscal transfers, including the General Allocation Fund (DAU), the Special Allocation Fund (DAK), and the Revenue Sharing Fund (DBH), on poverty levels and the Open Unemployment Rate (TPT) in 34 Indonesian provinces, by placing Capital Expenditure as a moderating variable. Using an explanatory quantitative approach with the Two-Way Fixed Effects Model (FEM) method on panel data for the 2017–2023 period, the results show that the fiscal transfer component does not directly have a significant effect on poverty. However, after the inclusion of interaction variables, Capital Expenditure is proven to significantly moderate by strengthening the negative impact of DAU in reducing poverty rates, while the interaction of DAK and Capital Expenditure is positively associated as a reflection of the accuracy of policy allocation ( policy targeting ) to areas with high structural poverty. On the other hand, DAU consistently has a negative and significant effect on reducing unemployment (TPT) in all model specifications, while Capital Expenditure is not proven to moderate the relationship between fiscal transfers and TPT because labor absorption in the physical infrastructure sector tends to be temporary and seasonal
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