The Association Between Rural Transformation and Poverty Rates across Regencies in Central Java Province

Rural transformation involves changes in agricultural production patterns and labor reallocation from agriculture to non-agricultural sectors. Although these changes are expected to improve welfare, they do not necessarily reduce poverty. This study examines the relationship between rural transformation indicators, namely the horticultural share and industrial employment share, and poverty rates in 16 regencies in Central Java Province during 2018-2025, controlling for average years of schooling and the open unemployment rate. A quantitative approach is employed using secondary panel data from official publications of Statistics Indonesia (BPS) of Central Java Province. The data are analyzed using panel regression with the Random Effects Model (REM) and White Period robust standard errors. The results show that the horticultural share is negatively associated with poverty, while the industrial employment share is positively associated with poverty, both are statistically significant at the 10% level. Average years of schooling is negatively associated with poverty, whereas the open unemployment rate is positively associated with poverty, both are significant at the 5% level. All explanatory variables are jointly statistically significant. These findings highlight the importance of horticultural development, educational improvement, and productive employment opportunities in supporting poverty alleviation in Central Java Province.