Examining the Relationship Between Disaster Mitigation Spending, Unemployment, and Poverty: The Mediating Role of Economic Growth in Aceh Province, Indonesia

This study investigates the impact of disaster mitigation spending on poverty reduction through economic growth in Aceh Province. The study employs panel data regression analysis using EViews software, with data collected from 23 districts/cities in Aceh Province from 2011–2023. The analysis applies three-panel data approaches: the Common Effects Model, Fixed Effects Model, and Random Effects Model (REM), with model selection conducted using the Chow test, Hausman test, and Lagrange Multiplier test. The results identify the Random Effects Model (REM) as the most suitable for this analysis. The findings reveal that natural disasters significantly disrupt economic activities, leading to property damage and higher poverty levels. Disaster mitigation spending is critical in reducing unemployment and poverty while fostering economic recovery. Additionally, the study confirms that economic growth serves as a mediator between disaster mitigation spending and poverty reduction, demonstrating its importance in addressing socio-economic challenges. These results emphasize the need for effective and well-targeted budget allocation for disaster mitigation programs to minimize economic disruption, enhance recovery efforts, and improve community welfare. The study’s policy recommendations encourage local and national governments to prioritize disaster mitigation initiatives and economic growth strategies that strengthen community resilience. By doing so, Aceh Province can better respond to future disaster threats, ensuring sustainable economic stability and poverty reduction.