The Role of Education on Poverty Reduction in Indonesia

Abstract

Poverty is one of the development problem faced by every country. Indonesia as one of the largest archipelagic country, still faces many challenges in reducing poverty especially because its characteristic varied across regions. Improving the quality of human resources through education is believed as one of the solution to alleviate poverty because it can increase human productivity and improve welfare. This study aims at analyzing the role of education towards poverty and divided it by the level of education. Using panel data of 33 provinces during the years 2007-2010, this study finds that education –in general– has a significant role to reduce poverty in Indonesia, especially for secondary education and higher education. Otherwise, primary education has positif role to increase the level of poverty. Economic growth, as an indirect effect of education on poverty, also has a significant role in reducing poverty in Indonesia.