The Effect of Revenue Sharing Fund on Economic Growth and Income Disparity (Case Study of District / City in East Kalimantan Province)

Abstract

This study aims to examine, test and analyzing empirically: (1) direct effect of revenue sharing fund on expenditure structure; (2) direct and indirect effect of revenue sharing fund on income disparity and economic growth; (3) direct effect of expenditure structure on income disparities; and (4) direct and indirect effect of expenditure structure on economic growth. This study used pooled-data of 14 district / city in East Kalimantan Province for 2004-2011 periods. The analysis model used is Structural Modelling Analysis. The study results show that: (1) revenue sharing fund (DBH) directly have a negative and significant effect on expenditure structure; (2) revenue sharing fund (DBH) have a direct negative and indirect positive effect on income disparities and negative but insignificant on economic growth; (3) expenditure structure has a direct negative effect on income disparity and positive but insignificant effect on economic growth; (4) income disparity has a significant and positive effect on economic growth.

Keywords: revenue sharing fund, expenditure structure, economic growth, income disparity.

DOI: 10.7176/JESD/10-14-14

Publication date:July 31^st 2020