Do Non-Economic Factors Effect Village Fund?

Abstract

The Government has enacted Law Number 6/2014 concerning Villages. One policy included in that Law is the provision of Village Funds (Dana Desa) in which its implementation can be investigated based on non-economic aspects. For this reason, this study aims to analyze the impact of non-economic factors on Village Funds disbursed in 29 districts in Central Java Province. These factors include population and the Human Development Index (HDI). While using secondary data from 2015-2017, this research employs a method using panel data with the best model known as the Fixed Effects Model (FEM). The FEM estimation results show that the population has a significant impact, while HDI's impact is not significant. Besides, the ratio between Village Funds and the population has a significant impact on Village Funds. Thus, both the Central and the Regional Government, as well as the Village Heads, should consider the population in allocating Village Funds. The contribution of this study is that the Government should formulate an appropriate policy for Village Funds allocation by considering non-economic factors in each village.JEL Classification: O10, O23, E62How to Cite:Ratwianingsih, L., Cahyadin, M., & Sutomo. (2020). Do Non-Economic Factors Affect Village Funds?. Signifikan: Jurnal Ilmu Ekonomi, Vol. 9(1), 93-106. doi: http://dx.doi.org/10.15408/sjie.v9i1.14056.