Volume 1: Maret 2023 – econworkingpaper.feb.ugm.ac.id

The Influence of Land Registration on Regional Income per Capita in Indonesia

Volume 1: Maret 2023 Working Paper Selasa, 14 Maret 2023

Abstract

This study was conducted to analyze and measure the impact of land registration on economic growth in provinces in Indonesia. The study suggests that there is a possibility of unobserved heterogeneity that may influence the outcome variable, namely geographical conditions, which include land area in each province and the number of land areas that have not been certified. Further information regarding these two factors still needs to be sought. Using panel data from 34 provinces in Indonesia for ten years (2010-2019) and a fixed effect panel method to overcome the unobserved heterogeneity bias, this study found that a 1 percent increase of land registration increases a province’s gross domestic product per capita by a significant 0.12 percent, after controlling for other factors. These findings align with previous studies that suggest that land registration influences society’s welfare through increased access to financial credit.

Author

Aiman Akbar

Heni Wahyuni

Reseach Area

National

Research Topic

Environment

Land

Econometric and Statistical Methods and Methodology: General

Keywords

land registration

per capita gross domestic product

panel data method

fixed effect model
unobserved heterogeneity

Publication Type

Working Paper

The Retirement Consumption Puzzle Effect in Indonesia: Evidence from IFLS 4 and 5

Volume 1: Maret 2023 Working Paper Selasa, 7 Maret 2023

Abstract

This study aims to see whether there is a decline in consumption in retirement which is not in line with the life cycle hypothesis (consumption puzzle effect). Previous studies revealed that consumption has shifted when entering retirement due to efficient spending. This research analyzes the consumption pattern of the Indonesian elderly peculiarly in the frame of the retirement consumption puzzle. Utilizing data from the Indonesian Family Life Survey (IFLS) wave 4 and 5 from 2007 and 2014, and this study constructed panel data with a total sample of 2,556 individuals. The Difference in Differences (DiD) method is used to see whether the change in labor status toward retirement causes a decrease in household consumption. As robustness, this study also uses the division of age categories. The results of this study indicate that there is a retirement consumption puzzle in Indonesia, with a decrease of 19.9% in total expenditure per capita. The consumption decrease in retirement indicates government should consider pension funds and create social security programs to maintain the welfare of the elderly.

Author

Margareta Vania Putri

Catur Sugiyanto

Reseach Area

National

Research Topic

Household Production and Intrahousehold Allocation

General Welfare, Well-Being

Time Allocation and Labor Supply

Labor Law

Keywords

Retirement

Household Consumption

Life Cycle

Hypothesis

DiD

Publication Type

Working Paper

Analyzing the Effects of Openness and Political Variables on FDI in Indonesia

Volume 1: Maret 2023 Working Paper Selasa, 7 Maret 2023

Abstract

To recognize the importance of investment flows as one of the components of development, ASEAN member countries have created the ASEAN Economic Community (AEC) 2015 blueprint as guidelines for setting up a free and open investment regime in ASEAN. The enactment of AEC makes the issue of foreign direct investment (FDI) in Indonesia more attractive. However, an increase in FDI is followed by uneven absorption of FDI in various regions of Indonesia. The implementation of regional autonomy, which gives more authority to governors, allegedly influence investors’ decision to invest. This study aims to determine whether the disclosure of openness and the presidential election have an influence on FDI inflows across 30 provinces of Indonesia. This study employs panel data regression with a fixed effect model. The findings suggest that the level of openness and political variables contribute to the absorption rate of FDI inflows in the regions.

Author

Niramaya Laksmitaningtyas

Wisnu Setiadi Nugroho

Reseach Area

National

Research Topic

Econometric Modeling

Economic Development

General Regional Economics

Keywords

Foreign Direct Investment

Openness

Political Variables

Publication Type

Working Paper

Digitalization and Access to Household Credit: Pre and Post COVID-19 Pandemic

Volume 1: Maret 2023 Working Paper Selasa, 7 Maret 2023

Abstract

This study examines the impact of digitalization on access to household credit during the National Economic Recovery Program. Data from the National Socioeconomic Survey (Survei Sosial Ekonomi Nasional/Susenas) and Village Potential Statistics (Potensi Desa/Podes) from 2019 (pre-pandemic) and 2021 (one year post-pandemic) are used in this research. Using the binomial logit model-fixed effect, this research found that digitalization has a significant impact on access to household credit, both before and during the COVID-19 pandemic. The majority of households with access to credit are headed by males living in rural areas, who are married, working, graduated from junior high school or above, and are 30-59 years old. In line with the national economic recovery program, the government can accelerate financial inclusion by increasing access to household credit to all levels of the society without gender discrimination through banking digitalization.

Author

Cita Puspita Sari

Eny Sulistyaningrum

Reseach Area

National

Research Topic

Household Finance

Financial Institutions and Services

Economic Development

Research and Development

Monetary Policy, Central Banking, and the Supply of Money and Credit

Keywords

Digitalization

Credit Access

Financial Inclusion

Logit

Pandemic

Publication Type

Working Paper

Optimal Tax Rate Of Cigarette Excise Tax In Indonesia

Volume 1: Maret 2023 Working Paper Minggu, 5 Maret 2023

Abstract

We analyze the optimal cigarette excise tax rate based on the optimal tax theory. We find that the optimal tax is different when there is an illegal production of cigarettes. We find that, without illegal production of cigarettes, the government can achieve the first best optimum condition by fully internalizing externality. The government can optimally choose the amount of tax on legal cigarettes that is equal to the marginal cost of health care. When there is an illegal production of cigarettes, we find that the rate of cigarette excise tax is not equal to the marginal cost of health care. Therefore, the government need more policy instruments to achieve the optimal tax rate in this case. We also find that an increase in the work hours of a legal cigarette production reduces illegal cigarette productions. Policymakers can use marginal income tax policy as an incentive to reduce illegal production of cigarettes.

Author

Muhammad Fawdy Renardi Wahyu

Ardyanto Fitrady

Reseach Area

National

Research Topic

Consumer Economics: Theory

Efficiency

Taxation, Subsidies, and Revenue

Keywords

Optimal Tax

Excise Tax

Indonesia Cigarettes Excise Tax

Publication Type

Working Paper