Analysis of Socio-economic Variables Impacting Poverty Alleviation in Regional Development: A Case Study in Deli Serdang Regency, Indonesia

Abstract

This study analyzes the impact of macro socio-economic variables on poverty alleviation within the context of regional development in North Sumatra Province from 2019 to 2023. The socio-economic variables examined include economic growth, average years of schooling, life expectancy, and the open unemployment rate. The research employs a panel data regression approach using the Fixed Effect Model, selected based on Chow and Hausman test results, to determine the best model fit. The findings reveal that economic growth, average years of schooling, and life expectancy have significant negative effects on poverty reduction, indicating that improvements in these areas help alleviate poverty. Conversely, the open unemployment rate shows a significant positive effect on poverty levels, suggesting that higher unemployment exacerbates poverty. The model explains 99% of the variation in poverty (R² = 0.990), indicating a high explanatory power. Based on these results, the study recommends the implementation of inclusive economic policies focusing on boosting economic growth, improving educational access, enhancing healthcare systems, and creating job opportunities to effectively reduce poverty. Additionally, further research with broader geographical coverage and more refined methods is necessary to enrich the understanding of poverty determinants in different regional contexts.