DETERMINANTS OF INCLUSIVE HUMAN DEVELOPMENT ACROSS REGENCIES AND CITIES IN CENTRAL JAVA

Abstract

The unequal distribution of development benefits poses a structural challenge that the conventional Human Development Index has yet to fully capture, necessitating a more holistic approach through the concept of inclusive human development. Central Java Province confronts a stark development paradox where, despite ranking third in population size and fourth as a national economic contributor, its Inclusive Human Development Index ranks only 24th out of 38 provinces, marked by a sluggish rate of improvement and persistent disparities across regencies and cities. This study aims to analyze the effects of education expenditure, health expenditure, minimum wage, labor force participation rate, open unemployment rate, poverty rate, and economic growth on inclusive human development across 35 regencies and cities in Central Java during 2021–2024. Using panel data regression and the Random Effect Model (REM), the results indicate that minimum wage has a positive and significant effect, while the open unemployment rate has a negative and significant effect on inclusive human development. In contrast, education expenditure, health expenditure, labor force participation rate, poverty rate, and economic growth do not have significant effects. These findings suggest that labor market conditions play a more important role than fiscal and macroeconomic factors in promoting inclusive human development. This study contributes to the literature on inclusive development and provides policy insights for fostering more equitable human welfare across regions.