Toward Sustainable Development Goals (SDGs) with Statistical Modeling: Recursive Bivariate Binary Probit

Poverty is still a global problem that must be immediately eradicated by Sustainable Development Goals (SDGs) 1, namely ending poverty anywhere and in any form. In 2021, West Papua province will have the 2nd most significant percentage of poor people after Papua province, with 21.84% of the poor population. Poor households in West Papua province are dominated by families, with the Head of Household (KRT) working in the agricultural sector at 65.10 %. In this research, joint modelling was carried out between the level of household welfare and the employment sector of the head of the household in the West Papua province. It is suspected that these two variables have endogeneity problems, where one of the response variables becomes a predictor variable in the other equation, so a recursive bivariate binary probit regression model is used. Recursive bivariate binary probit regression parameter estimation uses Maximum Likelihood Estimation (MLE), but the results are not closed form, so it is continued using the Newton-Raphson iteration method. The results of hypothesis testing show that partially, variables that significantly influence the level of household welfare include the variable marital status, KRT formal/informal workers, health complaints, asset ownership status, migration status, number of household members, classification of area of residence (Village/City), age of head of household, and employment sector of head of household. Meanwhile, variables that significantly influence the choice of working in the agricultural sector include the director of household education, classification of area of residence (rural/city), and the age of the head of household.