The Effect of Indonesian Migrant Workers' Remittances on Poverty in Indonesia

Yulia Anas; Sosmiarti Sosmiarti

doi:10.59261/inkubis.v8i4.537

Authors

Yulia Anas Universitas Andalas
Sosmiarti Universitas Andalas

DOI:

https://doi.org/10.59261/inkubis.v8i4.537

Keywords:

Economic Growth, Income Inequality, Inflation, Poverty, Remittances

Abstract

Background: Remittances from Indonesian migrant workers can supplement household resources, but their national association with poverty must be assessed alongside economic conditions and income distribution.

Objective: This study examines the relationship between remittances from Indonesian migrant workers and poverty in Indonesia, while accounting for economic growth, income inequality, and inflation.

Methods: Using annual secondary data reported for the 2004-2024 study period, the analysis applies an Ordinary Least Squares (OLS) model to assess whether remittance inflows are associated with changes in the poverty rate after controlling for broader macroeconomic conditions.

Results: The estimation results show that remittances are negatively and statistically significantly associated with poverty (β = -0.021; p < 0.001). Economic growth also has a negative and significant coefficient (β = -0.084; p = 0.031), whereas income inequality has a positive and significant coefficient (β = 0.154; p = 0.001). Inflation has a positive but statistically insignificant coefficient (β = 0.007; p = 0.440). The model reports an R-squared of 0.942. These findings indicate that remittance inflows and economic expansion are associated with lower poverty, while income inequality can weaken poverty-reduction outcomes.

Conclusion: The results highlight the importance of considering distributional conditions when assessing the contribution of remittances to household welfare and poverty reduction in Indonesia.

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