The Effect of Economic Growth, Minimum Wage, and Education on Poverty in the Horseshoe Region

Abstract

This study aims to analyze the effect of economic growth, district/city minimum wage (UMK), and education on poverty in the Tapal Kuda region of East Java. The study employs a quantitative approach using balanced panel data from seven regencies during 2018–2024 obtained from Statistics Indonesia (BPS). Data were analyzed using panel data regression with the Fixed Effect Model (FEM) selected through the Chow, Hausman, and Lagrange Multiplier tests. The results indicate that economic growth and district/city minimum wage have a negative and significant effect on poverty, while the average years of schooling has no significant effect. These findings suggest that poverty reduction in the Tapal Kuda region is more strongly influenced by economic factors that directly increase community income than by improvements in education, whose benefits tend to emerge in the longer term. The study provides empirical evidence to support regional poverty reduction policies based on local development characteristics.