The Influence of the Distribution of ZIS Funds and Government Expenditures on Income Inequality and the Human Development Index in Indonesia from 2018 - 2022

Abstract

The rise in Indonesia's GDP suggests economic growth, but the unequal distribution of income within communities indicates persisting inequality. This imbalance implies that the development in the region is not equally distributed. Measuring community welfare comprehensively requires socio-economic indicators to capture the whole picture. Thus, investigating community welfare by linking socio-economic indicators is imperative. This study analyzes the direct and indirect impact that ZIS fund distribution and government spending have on income inequality and the Human Development Index (HDI) in Indonesia. Through path analysis, the relationship between ZIS variables, government spending, income inequality, and HDI is examined. The findings reveal that ZIS directly and indirectly affects HDI by increasing income inequality as a mediating factor. Government spending has a negative indirect impact on the Human Development Index due to a positive direct impact on income inequality, as revealed by Path Analysis.