The Effect of Village Funds on Poverty, Unemployment, and Labor Force Participation Levels in Central Kalimantan Province 2020-2024

Abstract

Introduction/Main Objectives: This study evaluates the effectiveness of Village Funds on poverty rates, unemployment, and labor force participation in Central Kalimantan Province for the 2020–2024 period. Background Problems: The background is the importance of empirically assessing this national fiscal decentralization policy in promoting rural welfare. Novelty: The study's novelty lies in its comprehensive panel data analysis in specific regions with unique socio-economic characteristics. Research Methods: The research method used panel data regression analysis with the Chow and Hausman test on secondary data from 13 districts. Finding/Results: The results show that: (1) Village Funds have no significant effect on poverty reduction; (2) Village Funds have no significant effect on unemployment reduction; and (3) Village Funds actually have a significant negative effect on labor force participation. Conclusion: Village Fund allocation alone is insufficient to improve the welfare of rural communities in the study area. This implies the need for more targeted policy adjustments, such as shifting the focus from infrastructure development to community empowerment programs, improving governance, and involving local participation. The key message of the research is that the effectiveness of fiscal decentralization policies is determined more by the quality of absorption and program suitability, rather than simply the size of the budget.