Analysis of Determinants of Poverty and Environmental Quality

Abstract

The primary objective of this research is to examine the determinants of poverty and environmental quality in Indonesia,This study focuses on two endogenous variables, namely: a) Poverty (Y1), which is measured based on the proportion of individuals living in poverty per province, b) Environmental quality (Y2), which is measured using the Environmental Quality Index (IKLH). The exogenous variables in this study include: a) Labor force participation (X1), b) Investment level (X2), c)  Education (X3), d) Income inequality (X4), e) Population (X5), f) The economy is measured by Gross Regional Domestic Product (GRDP) (X6). This study aims to determine the influence of each exogenous variable on poverty and environmental quality at the provincial level in Indonesia. The data used is annual data collected from official government agencies. This study employs panel data regression analysis, conducted with the aid of EViews 12 software. So the findings from the research are as follows. There is no significant influence between labor force participation and poverty in Indonesia, meaning that increasing labor absorption is generally associated with a decrease in poverty, because more people working can increase their income and standard of living. There is a significant relationship between investment and poverty in Indonesia, meaning that investment generally has a complex and varied impact on poverty levels. In theory, investment can drive economic growth, which in turn can reduce poverty by creating jobs and increasing incomes. There is no significant effect of education on poverty in Indonesia, meaning that education does not have a significant impact on reducing or overcoming poverty. This means that while education is important, other factors such as Economic, social, and political dimensions likewise exert a substantial influence on poverty levels. There is no significant effect of income inequality on poverty in Indonesia. This means that while income inequality may exist, increases or decreases in inequality do not significantly impact poverty levels. In other words, poverty is not directly affected by the magnitude of income inequality. No statistically significant relationship is observed between education and environmental quality in Indonesia. This means that low levels of education regarding the importance of maintaining environmental quality will does not exert a statistically significant effect on environmental quality. There is a significant correlation between income inequality and environmental quality in Indonesia. Increasing income inequality is often associated with increased CO₂ emissions and the deterioration of overall environmental quality. An expanding disparity between affluent and economically disadvantaged populations can lead to greater pressure on natural resources and increased pollution. There is a significant influence between population and environmental quality in Indonesia. Population growth has a significant impact on environmental quality, primarily due to increased pressure on natural resources and the environment. Population growth can lead to decreased air and water quality, ecosystem damage, and reduced availability of land and clean water. No statistically significant relationship is found between economic conditions and environmental quality in Indonesia.