LAUSR

Abstract Social and economic development in rural area is one of the main concerns for Indonesia Government. Despite the importance of village owned enterprises in improving rural economy, evidences regarding the impacts of village fund and village owned enterprise (BUM Desa) in developing countries were still limited. This study presents that evidence from more than one thousand villages in Indonesia. It employs two different estimation strategies: first difference, and difference-in-difference methodologies adapted for continuous treatment. The results show that village fund is more likely to increase number of village-owned enterprise with similar trend between java and non-java region. However, rapid increase of village-owned-enterprises were not followed by large utilization. We do not evidence that BUM Desa provides more opportunity for villager to work.