Abstract
Indonesian government has established social safety net programs to reduce poverty and increase the productivity and income of poor households. Among other provinces in Indonesia, East Java has the highest poverty rate. Thus, this research aims to analyze the effectiveness of social safety net programs in reducing poverty rate in East Java. This research uses quantitative approach to measure the contribution of social safety net programs towards the income of poor households in East Java. This research employs equivalent simultaneous equation with three-stage least square (3SLS) method on secondary cross section data obtained from National Socio-Economic Survey (Susenas), March 2015. This research calculates and analyzes the impacts of social aid, social protection and labor market intervention programs towards the income of poor household income. The results show that social aid and labor market intervention programs have positive implication on the income of poor households. On the other hand, social security has no significant implication. Moreover, social security provides a safety net when a household faces unexpected situation such as redundancy, accident and death. Social security programs prevent poor households for being poorer.
Highlights
One of government efforts to reduce poverty is by establishing social safety net programs
Social safety net programs have been established by the government to reduce pressures on poor households, minimize social gap, provide a better life and accelerate effort to reduce poverty
A study on the effectiveness of social safety net programs becomes a necessity to evaluate the programs and suggest better activities and approach to be implemented in the future
Summary
One of government efforts to reduce poverty is by establishing social safety net programs. Social safety net programs take forms of government, private sector and community initiatives to transfer income or consumption towards poor households, protect vulnerable households from risks, and increase the social status of marginalized households (Suharto, 2009). Social safety net programs aim to reduce poverty and vulnerability by stimulating efficient labor markets, lessening exposure to risks of vulnerable citizens, and improving their capacity to protect themselves against threats and interruption/loss of income (Asean Development Bank, 2003). In ASEAN, social safety net programs have been established in several countries such as in Vietnam, Thailand, Malaysia and Indonesia (Asean Development Bank, 2016). In Vietnam, the social safety net programs successfully reduced proportion of population below the poverty line from 13.4% in 2009 to 7% in 2015. In Malaysia the proportion of poor population dropped from 3.8% to 0.6%
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