Village fund, village-owned-enterprises, and employment: Evidence from Indonesia: Fid-Bau Portal

Village fund, village-owned-enterprises, and employment: Evidence from Indonesia

Arifin, Bondi / Wicaksono, Eko / Tenrini, Rita Helbra / Wardhana, Irwanda Wisnu / Setiawan, Hadi / Damayanty, Sofia Arie / Solikin, Akhmad / Suhendra, Maman / Saputra, Acwin Hendra / Ariutama, Gede Agus / ... [mehr]

Abstract

Abstract Social and economic development in rural area is one of the main concerns for Indonesia Government. Despite the importance of village owned enterprises in improving rural economy, evidences regarding the impacts of village fund and village owned enterprise (BUM Desa) in developing countries were still limited. This study presents that evidence from more than one thousand villages in Indonesia. It employs two different estimation strategies: first difference, and difference-in-difference methodologies adapted for continuous treatment. The results show that village fund is more likely to increase number of village-owned enterprise with similar trend between java and non-java region. However, rapid increase of village-owned-enterprises were not followed by large utilization. We do not evidence that BUM Desa provides more opportunity for villager to work.

Highlights • The Village Fund is intended for the Village to fund government administration, infrastrutures and community development. • Village Fund applied formula has caused the village funds per capita allocation in Non-Java Island up to 400% larger of those in Java region. • This study obtains survey primary data from 1,111 desa village officials and 904 kelurahan officials. • Village fund is more likely to increase number of village-owned enterprise (BUM Desa). However, limited utilization from villagers. • We do not find evidence that BUM Desa increase employment opportunities for villagers.