Micro, small, and medium enterprises (MSMEs) and poverty reduction: empirical evidence from Indonesia

Figures & data

Table 1. Estimation of direct effect of SMEs and MSEs on poverty reduction.

Poverty indicators independent variables	The effect of SMEs and other control variables on poverty reduction			The effect of MSEs and other control variables on poverty reduction
	P0	P1	P2	P0	P1	P2
MSEs				−4,035***	−0,366**	−0,102
L_MSEs				0,123	−0,018	−0,008
SMEs	−1,453**	−0,471***	−0,152***
L_SMEs	−0,025*	−0,004	−0,002*
Gr	−0,240**	−0,012	0,0006	−0,354**	−0,023	−0,004
Gov	−0,420***	−0,079***	−0,021***	0,075	−0,076***	−0,023***
Op	−0,043	−0,0002	−0,006	−0,051	0,009	0,003
I	0,106	0,048	0,022*	−0,154	0,007	0,005
R^2	0,94	0,94	0,92	0,93	0,92	0,89
F-Statistic	41,246	40,48	29,591	35,39	30,53	21,86
Prob (F-Stat)	0,0000	0,0000	0,0000	0,0000	0,0000	0,0000

*Significant at 10%; **significant at 5%; ***significant at 1%.

Table 2. Estimation of effect of SMEs and MSEs on labor absorption.

Variables	Labor absorption in SMEs	Labor absorption in MSEs
SMEs	1,483**
MSEs		0,212***
Gr	0,100**	0,008***
Gov	0,153	0,005
Op	−0,066***	−0,006
I	0,176***	0,001
R^2	0,85	0,98
F-Statistic	18,41	176,13
Prob (F-Stat)	0,0000	0,0000

*Significant at 10%; **significant at 5%; ***significant at 1%. ns = not significant.

Table 3. Indirect effect of SMEs and MSEs on poverty reduction through labor absorption.

Equations variables	Indirect effect of SMEs on poverty reduction through labor absorption in SMEs			Indirect effect of MSEs on poverty reduction through labor absorption in MSEs
	P0	P1	P2	P0	P1	P2
MSEs				0,0258	0,00381	0,0017
SMEs	−0,037**	−0,0059	−0,003**
Gr	−0,0025**	−0,0004	−0,0002*	0,0010	−0,0001	−0,0001
Gov	−0,0038	−0,0006	−0,0003	0,0006	−0,0001	0,0000
Op	−0,0017***	−0,0003	−0,0001*	−0,0007	0,0001	0,0000
I	−0,0044*	−0,0007	−0,0004*	0,0001	−0,0001	0,0000

*Significant at 10%; **significant at 5%; ***significant at 1%.

The coefficient value of the indirect effect obtained from multiplying the coefficient value of labor in equations (A1–A6) and the coefficient of each independent variable in equations (A7–A8) (these equations can be found in appendices).

Table 4. Total effect of SMEs and MSEs on poverty reduction.

Equations variables	Equation (7) for total effect of SMEs on poverty reduction			Equation (7) for total effect of MSEs on poverty reduction
	P0	P1	P2	P0	P1	P2
MSEs				−4,009	−0,369	−0,1037
SMEs	−1,490**	−0,476	−0,155**
Gr	−0,242***	−0,012	−0,0008	−0,353**	−0,0231	−0,0041
Gov	−0,424	−0,079	−0,0213	0,075	−0,0761	−0,0230
Op	−0,045	−0,0031	−0,0061	−0,052	0,0091	0,0030
I	0,102	0,0555	0,0216	−0,154	−0,0070	0,0050

Note: The coefficient of each variable is obtained from summing up coefficients in Tables 1 and 3.

Table A2.1. Correlation matrix among variables for all models.

	GOV	GR	I	L_MSEs	OP	MSEs	L_SMEs	SMEs
GOV	1.000000	−0.664281	0.485473	−0.059743	0.662011	−0.660241	−0.159207	−0.641177
GR		1.000000	−0.651157	0.148565	−0.354977	0.241819	−0.055977	0.222868
I			1.000000	0.202691	0.706179	−0.340480	0.185030	−0.228322
L_MSEs				1.000000	0.275396	−0.395830	−0.035135	−0,270526
OP					1.000000	−0.625172	−0.084174	−0.565173
MSEs						1.000000	−0,366724	0,754056
L_SMEs							1.000000	−0.084174
SMEs								1.000000

Table A2.2. Variance Inflating Testing (VIT).

Variables	The effect of SMEs on poverty reduction	The effect of MSEs on poverty reduction	The effect of SMEs on L_SMEs	The effect of MSEs on L_MSEs
	VIT	VIT	VIT	VIT
SMEs	3.086452		7.522295
L_SMEs	1.712240
MSEs		6.086873		4.279657
L_MSEs		1.303344
Gr	2.618303	2.745674	3.588444	3.223294
Gov	3.622411	4.625732	5.049682	5.370518
Op	3.973896	3.249241	3.832329	3.279709
I	6.891882	4.055836	2.863709	3.055291

Table A3.1. Heteroskedasticity and autocorrelation test for all equation models.

Dependent variables	Direct effect of SMEs and 4 control variables
	Heteroskedasticity test		Autocorrelation test
	Breusch-Pagan-Goldfrey	Conclusion	Breusch_Goldfrey serial correlation LM	Conclusion
P0	Prob Obs*R-squared: 0.11^ns	No Heteroskedasticity	Prob Chi-squared = 0.11 ^ns	No autocorrelation
P1	Prob Obs*R-squared: 0.15^ns	No Heteroskedasticity	Prob Chi-squared = 0.11 ^ns	No autocorrelation
P2	Prob Obs*R-squared: 0.07*	Heteroskedasticity	Prob Chi-squared = 0.42 ^ns	No autocorrelation
Dependent variables	Direct effect of MSEs and 4 control variables
	Heteroskedasticity test		Autocorrelation test
	Breusch-Pagan-Goldfrey	Conclusion	Breusch_Goldfrey serial correlation LM test	Conclusion
P0	Prob Obs*R-squared: 0.03**	Heteroskedasticity	Prob Chi-squared: 0.35^ns	No autocorrelation
P1	Prob Obs*R-squared: 0.46^ns	No heteroskedasticity	Prob Chi-squared: 0.49^ns	No autocorrelation
P2	Prob Obs*R-squared: 0.42^ns	No heteroskedasticity	Prob Chi-squared: 0.47^ns	No autocorrelation
Dependent variables	The effect of MSE and SMEs on L_MSEs and L_SMEs, respectively
	Heteroskedasticity test		Autocorrelation test
	Breusch-Pagan-Goldfrey	Conclusion	Breusch_Goldfrey serial correlation LM test	Conclusion
L_SMEs	Prob Obs*R-squared: 0.25^ns	No heteroskedasticity	Prob Chi-squared: 0.55^ns	No autocorrelation
L_MSEs	Prob Obs*R-squared: 0.13^ns	No heteroskedasticity	Prob Chi-squared: 0.24^ns	No autocorrelation

Note: ns = not significant; * = 10% level of significance; and ** = 5% level of significance.

Table A3.2. Endogeneity test of L_SMEs and L_MSEs in the poverty structural equation model.

Equation	Endogeneity test of L_MSEs in the poverty structural equation model
	Hausman test	Conclusion	Exogenous test	Conclusion
	Prob residual of L_SMEs		Prob estimated of L_SMEs
P0	0.66^ns	H0 is not rejected (no simultaneous): Exogenous	0.48^ns	H0 is not rejected (Exogenous)
P1	0.6^ns	H0 is not rejected (no simultaneous): Exogenous	0.97^ns	H0 is not rejected (Exogenous)
P2	0.49^ns	H0 is not rejected (no simultaneous): Exogenous	0.75^ns	H0 is not rejected (Exogenous)
Endogeneity test of L_MSEs in the poverty structural equation model
Equation	Hausman test	Conclusion	Exogenous test	Conclusion
	Prob residual of L_MSEs		Prob estimated of L_MSEs
P0	0.01**	H0 rejected (simultaneous): Endogenous	0.85^ns	H0 is not rejected (Exogenous)
P1	0.26^ns	H0 is not rejected (no simultaneous): Exogenous	0.39^ns	H0 is not rejected (Exogenous)
P2	0.3^ns	H0 is not rejected (no simultaneous): Exogenous	0.57^ns	H0 is not rejected (Exogenous)

Note: ns = not significant, ** = a 5% level of significance.