THE GOVERNMENT TRANSFERS AND THE FLYPAPER EFFECT PHENOMENON OF CITY/DIGENCY AREA IN JAVA ISLAND

Abstract

Intergovernmental transfers play an important role as a source of regional income to reduce the
gap between demand and income. The purpose of this study was to determine the effect of GRDP,
DAU, and Population Density in metropolitan and non-metropolitan areas in Java in 2019 and
to determine the effect of taxes and DAU in provinces with high DAU and provinces with low
DAU in Java in 2010-2019. In addition, this study was also conducted to analyze the causes of
the flypaper effect phenomenon in Java. Secondary data used are cross section data from
the BPS of each province and panel data from the DJPK. The results of research using multiple
linear regression method with E-Views SV.11 software show that GRDP and DAU have a
positive and significant effect on regional spending in metropolitan and non-metropolitan
areas. DAU and taxes have a positive and significant effect on regional spending in
provinces with high and low DAU. Population Density only has a positive and significant effect
on regional spending in metropolitan areas. The flypaper effect phenomenon occurs throughout
Java.