Socio-Economic Indicators and Income Inequality: Lesson from West Java in Indonesia

Abstract

This study is aimed at investigating the impact population, human development index, and economic growth in determining the income inequality in West Java of Indonesia. This paper used a panel regression to gain insight into comprehensively understanding the relationship between variables. This study engaged eight years of time series data from 2011 to 2018 and cross-section data of 27 districts/cities in West Java Province from Statistics Indonesia (BPS). The findings indicate that population, human development index and economic growth affect income inequality altogether. In partial, total population and human development index can explain the income inequality. Meanwhile, economic growth failed in influencing income disparity of West Java Province. This finding suggests that the Kuznets hypothesis of the “U-Reverse” curve in West Java Province was not proven for the period 2011 to 2018. This study emphasizes the significant impact of having strategies in suppressing the population in West Java Province both through programs and binding regulations relating to births and immigration. Also, the synergy between stakeholders in providing jobs opportunities that potentially reduce inequality in the West Java province of Indonesia.