Abstract
The objective of this reseach are to: (1) analyze the factors affecting human development index and household expenditures for health, education and others, (2) predict the impacts of government expenditure policy in the field of education, health, and infrastructure on human development index in Central Java. The model was built using econometric approach in the form of a system of simultaneous equations, including five blocks i.e. government's revenue, expenditures, input, output, and performance. The system of simultaneous equations consisted of 26 equations (19 structural equations and 7 identity equations). The estimation method used Two Stage Least Squares with SYSLIN procedure. Prediction simulation used the stepwise Autoregressive method. The model simulation used Newton's method and SIMNLIN procedure. The results of policy simulation concludes that the combination of the increase in government expenditure for education and infrastructure lead to better performance in increasing income per capita, disposable income and HDI compared to the combination of the policy of the increase in government expenditure for education and in both municipalities and district, but municipalities receive greatest impact compared to the district.
Highlights
The 21st century is marked by the improvement of human resources quality
Endogenous variable in the equation of Human Development Index was significantly affected by explanatory variablels that was simultaneously showed by F statistic on significance standard ( ) of 0.01 by the value of
The estimated result of equation of Human Development Index showed that HDI was significantly affected by income per capita, poverty, and HDI in the past year by a sign that is suitable with hypotheisis
Summary
The 21st century is marked by the improvement of human resources quality. Challenging development in 21st century according to the Human Development Report is concerning aspects of social justice and greater access to the better quality of human life (United Nations Development Program, 2016). This can occur as a result of government policy that is still biased in urban areas compared to rural This is reinforced by the results of research conducted by (Sulistyowati, 2013) for the case in Central Java, which stated that the increase in infrastructure expenditure by billion rupiah could increase the GDP by 9 percent and reduce poverty by percent. Increasie in public education is able to improve health (life expectancy), it can increase labor productivity, employment, the GDP, and reducing unemployment, inequality income and poverty (Sulistyowati et al, 2010). In this article the authors wanted to examine about 1) the factors that affect the HDI, household expenditures on education, health and others household expenditures and 2) how are the impacts of government expenditure policy (sectors of education, health, and infrastructure) on human development index of districts and municipalities in Central Java
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