The Impact of Fiscal Policy on Welfare Improvement in Indonesia: Study of Impact of Premium Assistance Beneficiaries on The National Health Insurance, Physical Special Allocation Fund for Health Sector, Education Sector, and Village Funds to Human Development Index

Abstract

One of the objectives of the fiscal policy is to improve public welfare. Still, there are funding constraints to improve welfare in some countries. Therefore, fiscal management to increase welfare must be implemented efficiently and effectively. In this research, to improve welfare, the fiscal policy will be focused on health, education and community empowerment which are the components of the HDI. This research used quantitative method with regression equation to explain the impact of fiscal and social policy, in the form of Recipients of Health Insurance Contribution Assistance (Penerima Bantuan Iuran Jaminan Kesehatan Nasional/ PBI JKN), physical special allocation found (Dana Alokasi Khusus/DAK) for health and education sector, village fund, region’s budget expenditure, locally generated revenue (Pendapatan Asli Daerah/PAD), and poverty level on human development index (HDI) improvement. The locus for this research is all regencies/cities in Indonesia that use panel data. The results of this research were divided into three findings. First, there were research variables with unidirectional results and significant improvement on HDI, which are physical DAK for the health and education sector, village funds, social expenditure, and PAD. Second, there were variables with unidirectional impact but it does not have a significant impact on the HDI improvement (i.e. PBI JKN). Third, there were variables with unidirectional and significant impact, such as personnel expenditure, material expenditure, capital expenditure, and poverty level.

The Impact of Fiscal Balance Funds Toward Human Development in Riau Province

“…This result does not align with previous research stating that DAK Physical influences human development through the education sector (Wulansari et al, 2021). DAK Physical in education will affect the increase in HDI, especially in education (Nawawi et al, 2021;Pambudi et al, 2021). On the other hand, the findings of this study are strengthened by previous research, which explains that DAK Physical does not affect human development in the education sector (Sembiring, 2020).…”

“…Research by Arifin and Setiawati (2023) and Sandjaja et al (2020), which indicated that special allocation funds (DAK) affect the HDI, supports the conclusions of this study. Human development from a health aspect can be influenced by DAK Physical (Fatria et al, 2020;Nawawi et al, 2021).…”

“…Particularly, the fiscal balance funds influence human development in the health aspect (Arifin & Setiawati, 2023;Fitriya & Witono, 2023;Rocheleau & Warren, 1980;Sandjaja et al, 2020). Likewise, Fatria et al (2020), Fitriya and Witono (2023), Letelier S & Ormeño C (2018), Nawawi et al (2021), Pambudi et al (2021), Whitman (1977), and Wulansari et al (2021) state that the fiscal balance funds significantly affect human development in the education aspect. Additionally, the fiscal balance funds influence increasing human development in the aspect of a decent standard of living (Arifin & Setiawati, 2023;Azhari et al, 2021;Fitriya & Witono, 2023;Yusuf & Afendi, 2020).…”

Impact of economic growth, village funds, and poverty on human development in Indonesia: An analytical study from 2015 to 2022

“…Village finances can increase welfare and equitable village development by increasing public services, developing the economy, closing development gaps between villages, and strengthening communities as development subjects (Rimawan et al, 2020). The findings are consistent with the remark of Nawawi et al (2021), who indicated that village grants are aimed at increasing the welfare and quality of life of village communities and alleviating poverty.…”

Human Development Index from the Islamic Perspective: Roles of Taxation, Zakah, and Health and Education Expenditures

“…This condition can be interpreted that the government's target of budget allocation for human development is not maximally carried out to increase human development in Indonesia. Nawawi et al (2021)there are funding constraints to improve welfare in some countries. Therefore, fiscal management to increase welfare must be implemented efficiently and effectively.…”