Estimating the Effect of Penalties on Regulatory Compliance

This dissertation has two main objectives. First, we investigate the effectiveness of penalties and other enforcement tools on regulatory compliance, and comprehensively address problems that exist in previous regulatory compliance studies. Second, we develop a model that explains why most empirical studies of regulatory compliance yield results that seem to be inconsistent with the theoretical predictions of Harrington’s (1988) seminal article on regulatory compliance. Thus the dissertation comprises two essays. In Essay One, we estimate facility compliance with the Clean Water Act (CWA) by comprehensively addressing the problems that exist in previous studies. The first problem is the failure to take into account undetected violations. To address this problem, we employ Detection Controlled Estimation (DCE) model, developed by Feinstein (1990). The DCE variant that we use is the two-sided expectation simultaneity version. We use this version because we assume that potential violators will react to what the regulator would do, and vice versa. The second problem that we address is in the measurement of regulatory penalties. Previous studies use dummy variables, but using a continuous measure of penalty enables us to differentiate the responses of minor from substantial violators, and avoid measurement error. Finally, we use a richer set of covariates. We include variables that were found to be statistically and economically significant in different previous studies, but which have never been estimated jointly. The results in Essay One indicate that facilities do respond to penalties, but the effect is economically insignificant. We argue that the small effect of penalties in reducing noncompliance comes from the way regulators enforce the regulations: penalties are rarely imposed on detected violators, or if imposed, the amount is usually negligible. The policy implication that arises from our findings is that if regulators want to see a substantial increase in the probability of compliance, it should consider imposing more frequent and severe penalties. The positive effects of more stringent enforcement on compliance rates come from three sources: (1) through specific deterrence effect; (2) through general deterrence effect; and (3) through an increase in the probability of self-reported violations, which allows for more efficient use of inspection budgets. In Essay Two, we extend Harrington’s (1988) theoretical model by (1) introducing an imperfect detection parameter, and (2) relaxing the movement between the groups, as in Friesen (2003). The extended model shows that when detection is imperfect, the zone for the “always-violate” strategy expands. This expansion has two implications. First, when firms are uniformly distributed in cost space, the number of firms that choose the “always-violate” strategy increases. Second, any empirical study that uses major facilities will be more likely to confirm “always-violate” strategy, but fail to confirm the other two strategies discussed in Harrington (1988). We also discuss other possibilities that can contribute to the difference between empirical results and theoretical predictions

The Effect of Money Supply and Government Expenditure Shock in Indonesia: Symmetric Or Asymmetric?

It has been more then four years since the economic crisis in Indonesia. While other Asian countries such as South Korea and Malaysia have shown significant improvement, Indonesia seems to have the slowest economic recovery process. In order to deal with the economic crisis, the government has imposed several policies, both monetary and fiscal. This paper tries to achieve two objectives; first, it tries to determine the existence of an asymmetric reaction of output and inflation to government expenditures and the money supply, and second, it tries to find the best policy to deal with the economic crisis, i.e., to determine which policy generates a larger and quicker response to output. It contains an overview of government expenditures and the money supply in the pre-crisis year, theoretical background and data analysis. The results of the study show that a shock in government expenditures has a significant effect on changes in output, and that the effect is asymmetric (positive shock has a larger impact than negative shock), while a money supply shock does not have a statistically significant effect on output. The paper concludes with three important government policy implications. First, the government must reallocate its spending, i.e. allocate more to development expenditures which will increase the productive capacity. Second, since Indonesia currently has a huge debt burden, it is not necessary for the government to increase its expenditures, since the effect on output reduction is not statistically significant. Third, the monetary authority should not use a shock in money supply to boost output, but it should focus on its function in delivering a low level of inflation

Fuel Availability and Java Households Cooking Fuel Choices: Evidence from Indonesia’s LPG Subsidy Policy

In 2007, Indonesia launched a 3 kg Liquified Petroleum Gas (LPG) cylinder for poor households, and micro-enterprises were started on Java island to reduce the burden of fuel subsidies. In its implementation, the subsidized LPG may also be used by non-target households, which has implications for the government’s fiscal burden. To avoid this, it is necessary to understand household behavior towards non-subsidized LPG choices. Household income and fuel availability determine the choice of household cooking fuel types. However, existing studies have not seen the relationship between subsidized and non-subsidized LPG as a household cooking fuel. Using rich data from the March 2018 National Socio-Economic Survey (Susenas) and the Ministry of Energy and Mineral Resources (KESDM) information, this study examined the relationship between income, subsidized LPG quota as a representation of the availability of subsidized fuel, and non-subsidized LPG choices as household cooking fuel in Java in 2018. The Multinomial Logit model's estimation results found that an increase in income and a decrease in subsidized LPG quotas were correlated with an increase in the opportunity to choose non-subsidized LPG as household cooking fuel in Java in 2018. Furthermore, this study revealed that the largest subsidized LPG users were non-poor households

PERANAN HARGA CRUDE PALM OIL PADA KONVERSI HUTAN PRODUKSI DI INDONESIA

Pembukaan hutan untuk perkebunan kelapa sawit menjadi salah satu latar belakang alih fungsi hutan di Indonesia , khususnya pada hutan produksi konversi (HPK). Tingginya pembukaan hutan untuk perkebunan sawit diindikasikan memberikan dampak negatif terhadap fungsi dan kondisi hutan di Indonesia. Alih fungsi lahan hutan melalui proses pelepasan kawasan hutan untuk perkebunan sawit menjadi tujuan penelitian dengan menggunakan variabel independen yang mempengaruhi permintaan lahan untuk sawit yaitu harga CPO, tingkat suku bunga, nilai tukar, serta besarnya share industri pengolahan dalam Produk Domestik Bruto (PDB), dan Gross Domestic Product (GDP) dunia. Pelepasan kawasan hutan diestimasi menggunakan model tobit dengan left-ccensored (0) dengan menggunakan data pelepasan kawasan hutan untuk perkebunan sawit di tingkat provinsi tahun 1995 sampai tahun 2017. Hasil empiris menujukkan bahwa tingkat harga pada lag tertentu secara signifikan mempengaruhi peningkatan  pelepasan kawasan hutan untuk perkebunan sawit, demikian juga dengan  luas HPK, serta tingkat suku bunga internasional , pertumbuhan ekonomi dunia, dan share indutri dalam PDB secara positif dan signifikan mempengaruhi peningkatan pelepasan kawasan hutan untuk perkebunan sawit. Hasil dalam penelitian ini juga menunjukkan bahwa tingkat suku bunga dan nilai tukar tidak berpengaruh secara signifikan terhadap konversi hutan untuk perkebunan sawit di Indonesia

EFFECT OF WAGES ON MULTIPLE JOB HOLDING DECISIONS IN INDONESIA: EVIDENCE FROM THE INDONESIAN FAMILY LIFE SURVEY (IFLS) DATA OF 2007 AND 2014

Multiple job holding - i.e., a phenomenon in which workers have more than one job has become a trend in developed countries and is beginning to occur in developing countries, such as Indonesia. Existing studies provide the evidence that wages are a significant and consistent criterion to determine multiple job decisions. Wage increases in the primary job will decrease the incentive to have a second job as the reservation wage increases. However, we do not find any study which links the current multiple job decision with the past multiple job status. In this study, we use data from the Indonesian Family Life Survey (IFLS) in 2007 and 2014 to investigate whether or not a wage increase in the primary job reduces the incentive to have a second job in 2014, controlling for the multiple job status in 2007. Using logit and multinomial logit estimations, we find that the wage increase in the primary job decreases the probability of having a second job in 2014

EFEKTIVITAS POLA ALOKASI ANGGARAN TERHADAP KEMENANGAN INCUMBENT

Soesilo Bambang Yudoyono (SBY) mencalonkan diri kembali pada Pemilihan Presiden tahun 2009 dan memperoleh suara yang signifikan sebesar 60,80%. Penelitian ini memberikan bukti baru dampak pola alokasi anggaran belanja Pemerintah terhadap keterpilihan kembali pada Pemilihan Umum selanjutnya. Menggunakan pendekatan kuantitatif dengan model regresi OLS, penelitian ini menganalisis data 440 Kabupaten/Kota di Indonesia. Penelitian ini menggunakan data hasil Pemilihan Umum dari Komisi Pemilihan Umum (KPU) dan data Tugas Pembantuan (TP) dari Kementerian Keuangan untuk meneliti efektivitas pengeluaran belanja pemerintah terhadap perilaku pemilih di tingkat Kabupaten/Kota di Indonesia pada Pemilihan Umum. Penelitian ini mengkonfirmasi bahwa pengeluaran belanja pemerintah dan hasil kinerja Presiden pada periode sebelumnya merupakan faktor yang mendukung kemenangan SBY sehingga terpilih kembali

DAMPAK LIBERALISASI TARIF IMPOR PADA INVESTASI TEKNOLOGI PERUSAHAAN MANUFAKTUR INDONESIA

Penelitian ini bertujuan menganalisis dampak penurunan tarif impor pada investasi teknologi perusahaan manufaktur di Indonesia. Sampel penelitian ini adalah seluruh sektor industri manufaktur menengah besar (IBS) tahun 2003-2014. Pengujian hipotesis menggunakan pendekataan ekonometri dengan metode regresi tobit. Secara teori, liberalisasi tarif dapat meningkatkan atau menurunkan investasi teknologi. Perbedaan tingkat efisiensi (gap teknologi) perusahaan yang menyebabkan respon perusahaan terhadap liberalisasi tarif berbeda-beda. Ketika gap teknologi perusahaan di dalam negeri dengan frontier kecil maka peningkatan kompetisi mendorong investasi teknologi. Akan tetapi, ketika gap teknologinya besar maka secara teori terdapat dua kemungkinan yaitu menurunkan atau meningkatkan investasi teknologi. Indonesia merupakan negara berkembang di mana rata-rata tingkat efisiensinya kecil, sehingga di duga gap teknologi perusahaan manufaktur di Indonesia dibandingkan frontier-nya besar. Berdasarkan hasil regresi diketahui semakin besar penurunan tarif semakin tinggi investasi teknologi yang dilakukan. Selain itu, terbukti bahwa perusahaan dengan gap teknologi yang kecil memiliki investasi teknologi yang lebih besar dibandingkan perusahaan dengan gap teknologi yang besar. Perusahaan dengan gap teknologi yang besar melakukan investasi teknologi hanya untuk bertahan

EKSTERNALITAS PRODUKSI KERAMBA JARING APUNG WADUK JATILUHUR

Pada sistem budidaya keramba jaring apung terdiri dari beberapa subsistem salah satunya adalah subsistem proses produksi yang didalamnya terdapat aktivitas pemberian pakan. Tujuan dari penelitian ini untuk menganalisis pengaruh dari eksternalitas pemberian pakan terhadap produktivitas KJA. Penelitian dilakukan di Waduk Jatiluhur pada bulan Agustus-Oktober 2018. Pengumpulan data dilakukan secara primer dengan responden berjumlah 502 pembudidaya. Analisis data dilakukan secara kuantitatif dengan menggunakan persamaan regresi dan kualitatif dengan menggunakan analisis persepsi. Hasil dari estimasi menunjukkan eksternalitas pakan berupa limpahan sisa pakan yang tidak termakan memberikan dampak positif bagi produktivitas budidaya KJA secara langsung. Selanjutnya dari analisis persepsi responden setuju jika diadakan penertiban dengan cara pembatasan jumlah kepemilikan KJA tiap orang tetapi bukan dengan penertiban KJA hingga habis agar tidak timbul eksternalitas negatif secara langsung dari pemberian pakan. Rekomendasi yang bisa disarankan tetap dilakukan penertiban dan pembatasan jumlah KJA disertai dengan peningkatan pengawasan aktif agar tidak terjadi pembangunan KJA secara illegal

Pertambangan di Kawasan Konservasi: Permasalahan Regulasi dan Koordinasi

Informasi dan klaim tentang berlangsungnya kegiatan pertambangan di hutan konservasi dapat dengan mudah kita jumpai. Salah satunya, Komisi Pemberantasan Korupsi (KPK) dalam presentasi tentang koordinasi dan supervisi pengelolaan mineral dan batu bara di 19 provinsi pada akhir 2014, menyatakan bahwa izin pertambangan di kawasan hutan konservasi mencapai 1,37 juta hektar (KPK, 2014)

The Effect of Money Supply and Government Expenditure Shock in Indonesia: Symmetric or Asymmetric?

It has been more then four years since the economic crisis in Indonesia. While other Asian countries such as South Korea and Malaysia have shown significant improvement, Indonesia seems to have the slowest economic recovery process. In order to deal with the economic crisis, the government has imposed several policies, both monetary and fiscal. This paper tries to achieve two objectives; first, it tries to determine the existence of an asymmetric reaction of output and inflation to government expenditures and the money supply, and second, it tries to find the best policy to deal with the economic crisis, i.e., to determine which policy generates a larger and quicker response to output. It contains an overview of government expenditures and the money supply in the pre-crisis year, theoretical background and data analysis. The results of the study show that a shock in government expenditures has a significant effect on changes in output, and that the effect is asymmetric (positive shock has a larger impact than negative shock), while a money supply shock does not have a statistically significant effect on output. The paper concludes with three important government policy implications. First, the government must reallocate its spending, i.e. allocate more to development expenditures which will increase the productive capacity. Second, since Indonesia currently has a huge debt burden, it is not necessary for the government to increase its expenditures, since the effect on output reduction is not statistically significant. Third, the monetary authority should not use a shock in money supply to boost output, but it should focus on its function in delivering a low level of inflation.indonesia, government expenditures