Abstract
This study aims to examine the effect of Employment Development Index (EDI) on economic growth, and the effect of EDI on poverty level and the effect of economic growth on poverty level in Indonesia. This study used descriptive and exploratory analysis with secondary data source, that is, EDI, economic growth, and poverty level in 33 provinces of Indonesia during the period 2012–2013. Linear regression analysis was used to determine the form of force conditions between these three variables. The findings revealed that the effect of EDI on economic growth is insignificant, it was caused by the GDP unable to drive the economic growth and the EDI affects significantly on the poverty level in Indonesia. Then, the effect of economic growth on poverty level is insignificant, which means the economic growth is unable to be the basis for alleviating poverty in Indonesia.
Highlights
Economic development is essentially intended to reduce economic problems
This study aims to examine the effect of Employment Development Index (EDI) on economic growth, and the effect of EDI on poverty level and the effect of economic growth on poverty level in Indonesia
The findings revealed that the effect of EDI on economic growth is insignificant, it was caused by the GDP unable to drive the economic growth and the EDI affects significantly on the poverty level in Indonesia
Summary
Economic development is essentially intended to reduce economic problems. One of the crucial problems to be solved is poverty, a lack of choice and opportunities of the individuals to achieve an optimal exploitation of their potentials to participate in the decision making process affecting their livelihoods and well-being (Arsyad & Yakamura, 2010).To prevent them, the theories have been formulated. Economic development is essentially intended to reduce economic problems. One of the crucial problems to be solved is poverty, a lack of choice and opportunities of the individuals to achieve an optimal exploitation of their potentials to participate in the decision making process affecting their livelihoods and well-being (Arsyad & Yakamura, 2010). Trickle down effect means that the society members who live under the economic disadvantage will receive the benefit tricking down from those who are benefited with the growth process. As a matter of fact, it is still unprovoked (Lester, 1980). Althought the Millennium Development Goal (MDG’s) has been trying to cut down the extreme poverty up to the level 15% by 2015 (Bello, 2013), but the fact poverty and unemployment rate is increasing (Banuri, 2013)
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