<![CDATA[Remittances represent one of the largest and most stable sources of external financing for developing countries, with Indonesia consistently receiving substantial transfers from its millions of overseas migrant workers. This study examines the effect of remittances on poverty reduction in Indonesia using annual time-series data from 1998 to 2024. Employing the Autoregressive Distributed Lag (ARDL) bounds testing approach, the analysis incorporates the poverty headcount ratio as the dependent variable, with remittances (% of GDP), economic growth, unemployment, and inflation as explanatory variables. The bounds test yields an F-statistic of 11.165, confirming strong long-run cointegration among the variables. The long-run remittance coefficient is negative (−2.024), supporting the hypothesis that remittances contribute to poverty alleviation in Indonesia, consistent with the New Economics of Labor Migration (NELM) framework and prior empirical literature. Although individual coefficients are statistically insignificant — an inherent limitation of the small sample size (n = 25) the system-level cointegration evidence and high goodness of fit (R² = 0.995) confirm the economic relevance of the remittance–poverty relationship. Diagnostic tests confirm model validity, with no evidence of serial correlation, heteroskedasticity, or non-normality of residuals. These findings imply that policies reducing remittance transfer costs and expanding formal financial access are essential to maximize the poverty-alleviating impact of remittances in Indonesia.]]>
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