DETERMINANT OF SUBSIDY EXPENDITURE AND SOCIAL ASSISTANCE TOWARDS POVERTY IN INDONESIA FROM AN ISLAMIC ECONOMIC PERSPECTIVE
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Abstract
This study aims to analyze the effects of subsidy and social assistance spending on poverty in Indonesia, both separately and jointly, from an Islamic economic perspective. The method used in this study is a quantitative approach, employing multiple linear regression (OLS) on time series data from the Central Statistics Agency (BPS) and the Directorate General of Fiscal Balance (DJPK) of the Ministry of Finance. The population of this study is subsidy expenditure, social assistance expenditure, and the percentage of poor people in Indonesia for the period 2005–2024. The results of the study suggest that subsidy spending has no significant effect on poverty, whereas social assistance spending has a significant negative effect, indicating that increasing social assistance can reduce the poverty rate. Simultaneously, the variables of subsidy spending and social assistance spending have a significant effect on poverty. In Islamic economics, these findings emphasize the role of the state through fiscal policies oriented towards distributive justice and takaful ijtima'i to achieve welfare (falah)..
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