INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VO`LUME 10, ISSUE 03, MARCH 2021 ISSN 2277-8616 179 IJSTR©2021 www.ijstr.org Does Conditional Cash Transfer Positively Impact Poverty Status? Evidence From Indonesia Agus Faturohim, Jonna Estudillo Abstract: Dynamic studies on conditional cash transfer -focused (CCT) poverty in Indonesia have not revealed whether Program Keluarga Harapan (PKH) has had a significant amount of impact on household poverty. This study aims to properly investigate how PKH affects the household poverty status in Indonesia and whether it has had a positive impact on the Foster, Greer, and Thorbecke (FGT) indices. PKH has been associated with the increase in the level of PCE of beneficiary households by 1.46% and the decrease in the probability of becoming poor by 0.36%; nevertheless, it is not statistically significant. PKH has also been related to declines in the headcount ratio, the poverty gap index, and the severity index in most provinces. Overall, the two-year implementation of PKH has more likely provided the poor households with long-term benefits rather than short -term ones, which is limited to only six provinces. Index Terms: Conditional Cash Transfer, household poverty status, headcount ratio, poverty gap index, severity index. ——————————  —————————— 1. INTRODUCTION Poverty, one of the alleviation agendas of the United Nations’ Sustainable Development Goals (SDGs), is a persistent issue in developing countries, including Indonesia. For instance, the poverty rate of Indonesia reached a peak of 16.58% in 2007, decreasing significantly to 13.33% in 2010 and falling to a low of 10.64% (27.77 million people) in 2017 [1]. Although the poverty rate is decreasing, the number seems to be still relatively high, as it suggests that almost 28 million people are living under the poverty line. This trend has become a significant issue; therefore, the Indonesian government has made the poverty alleviation program their priority, and this program requires a budget. Furthermore, it needs an economical approach in order to further investigate what causes such existence and how to formulate an appropriate poverty alleviation policy. A significant number of studies suggests that the persistence of poverty must be investigated both in the dynamic and static term. Both have merits and demerits. As Bidani and Ravallion [2] contended, a static concept of poverty involves observing the population living under the given poverty line at a certain point in time. In this case, it is useful to analyze the trend of poverty in terms of the general impact of a policy. For instance, the study by Suryahadi and Sumarto [3] examined cross-sectional data to estimate poverty and vulnerability in Indonesia before and after the 1997–1998 crisis. They found that the levels of poverty and vulnerability increased after the crisis, and much of the increase was a result of an increase in chronic poverty. However, such measurement might lead to a less precise understanding of the cause of poverty persistence, as it would not be able to explain the process of poverty. Meanwhile, Müller [4] indicated that poverty is not merely a static event, which may cause a person to become poor due to some factors called shocks. Therefore, poverty is rather a dynamic phenomenon, since it could alternate over time, which means that some poor people might not remain poor after a certain point of time [5]. Thus, it needs a way to measure the reducing poverty policy by conducting poverty studies in dynamics terms rather than as a static concept. 2 LITERATURE REVIEW There has been an increase in evidence of poverty that supports the government in reducing the poverty rate of Indonesia. Grimm and Gräb [6] argued that the poverty rate in 1993–97 fell in 1997–2000 due to the decrease in the level of poverty in the rural areas of Indonesia. As confirmed by Alisjahbana and Yusuf [7], the longer the schooling years of the household head, the less the probability of the household to fall into chronic poverty. This study also found that IFLS data of 1993 and 1997 was significantly helpful in understanding the change of poverty status. Moreover, the study by Dartanto and Nurkholis [8] contended that human resources, family characteristics, the type of area, capital position, and job position have a higher probability of influencing poverty status. Suryahadi and Dewi [9] conducted a poverty dynamics analysis in Indonesia, which revealed the existence of inefficiency in accessing poverty assistance. Generally, such previous researches take into account the poverty dynamics concept for addressing the problems related to poverty persistence in Indonesia. Within the last two decades, the government of Indonesia has cut down fuel subsidies by raising the price of fuel at least three times in 2005, 2009, and 2013 to maintain the balance in the national account. Consequently, this increase caused shock in the households who live close to the poverty line. In the initial year of 2005, the number of beneficiaries was 15.4 million households, and the number increased by 18.8 million households in 2009 [10]. Such numbers suggest that the ______________________  Agus Faturohim: Local Government of Pangandaran Regency-Indonesia officer, Student of Universitas Indonesia, Depok City, Indonesia and of Graduate Institute for Policy Study (GRIPS), Tokyo, Japan. Email: afaturooo@gmail.com;  Jonna Estudillo (Coauthor): Professor at GRIPS, Tokyo, Japan. Email: jonna@grips.ac.jp.  We want to thank Katerina Petchko, Ono Sensei, and Matt Wicken, the magnificent fellows of EPP-GRIPS, Hara Sensei, Kudo Sensei, and Julie San for making our experience at the excellent GRIPS college so perfect. We want to extend our sincere gratitude to BAPPENAS for funding a major part of this research.