THE EFFECT OF UNIVERSITY PRESENCE ON PER CAPITA GRDP IN JAVA AND KALIMANTAN USING PROPENSITY SCORE MATCHING

Abstract

Regional economic development that is equitable remains one of the primary targets of Indonesia's national development policy. One factor presumed to contribute to regional economic growth is the presence of higher education institutions, particularly universities. Universities serve as centers for human resource development, technological innovation, and stimulants of local consumption and investment. This study aims to analyze the causal effect of university presence on per capita Gross Regional Domestic Product (GRDP) in districts/cities across Java and Kalimantan in 2023. Data were sourced from the Central Statistics Agency (BPS) and the Ministry of Education, Culture, Research, and Technology for the year 2023. Control variables include total population, poverty severity index, and open unemployment rate, with the treatment variable being a university presence dummy (1 = present, 0 = absent) and the outcome variable being per capita GRDP (in million rupiah). The method employed is Propensity Score Matching (PSM) to address selection bias inherent in non-experimental observational data. Estimation results indicate that districts/cities with universities have, on average, significantly higher per capita GRDP compared to those without universities, after controlling for relevant regional characteristics. These findings imply the importance of equitable access to higher education as an inclusive regional economic development policy strategy.