The Impact of Road Construction Program: Evidence from East Java']Java, Indonesia

The purpose of the Jalan Lintas Selatan (JLS) construction program is to reduce the inequality between the southern and the northern area in East Java. In order to measure the success of the road construction program, this study aims to evaluate the socioeconomic impact on villages passed by the JLS. Especially in Pacitan, Trenggalek and Tulungagung districts. This study uses Propensity Score Matching (PSM) and Difference in Difference (DID) to evaluate the causal impact, while the data are obtained from survey Potensi Desa (PODES) in 2008, 2011 and 2014. The findings of this study show that the road construction program has a positive impact to the regions. Due to the construction, population density, investment and job opportunities increased. It also shortens the distance of schools to the village center, especially senior high school. Interestingly it is also decreased length to karaoke. However, we also find that the road construction reduce the Own-Source Revenue (Pendapatan Asli Daerah) of the village government.