Inequality In Indonesia Research Articles

Towards a better measure of income inequality in Indonesia

Indonesia has experienced significant economic growth in recent years (on average, 5% in 2000–08), but many people are still living in poverty. Income inequality, as measured by the official Gini coefficient, has also increased. This paper evaluates household income and income inequality in Indonesia, assessing both market and non-market income to reach a more accurate measure of how actual income affects living standards. We find that if household income considers non-market income, income distribution is significantly more balanced, the coefficient of income inequality falls from 0.41 to 0.21 and the income share of the population's poorest deciles increases more than fivefold. The results suggest that market income alone is a misleading measure of income distribution in Indonesia.

Beyond Oligarchy?: Critical Exchanges on Political Power and Material Inequality in Indonesia

Beyond Oligarchy?: Critical Exchanges on Political Power and Material Inequality in Indonesia

Beyond Oligarchy? Critical Exchanges on Political Power and Material Inequality in Indonesia

Beyond Oligarchy? Critical Exchanges on Political Power and Material Inequality in Indonesia

Trade, Employment and Horizontal Inequalities in New Order Indonesia

This article explores the extent to which trade might impact horizontal inequalities in Indonesia by focusing on a district-level cross-sectional analysis of the relationship between different export sectors and the extent of horizontal inequalities across three dimensions. Although the causal directionality is unclear, there is significant evidence of correlations between particular industries and particular dimensions of horizontal inequality. There is no single industry that is consistently correlated with horizontal inequalities across all dimensions, however; neither are the results consistent across urban and rural districts. The conclusion that we can draw from this is that although the export structure of the Indonesian economy does appear to have influenced horizontal inequalities this has largely been located within a very particular and localized political economy of migration and ethno-religious identities. It is not so much that trade has favoured particular groups bestowed with higher endowments of education or other resources.

Matrix Index of Income Varieties of Indonesian Labor Force and Its Application in Indonesa

Matrix Index of Income Varieties (MIVP) is an index, which is developed from the variety co efficiency and statistic χ2 so that it will produce output totally as shown by Index of Williamson/Theil, as regionally as Index of Theil, sectorally as Index of Gini. Besides, Matrix Index of Income Varieties (MIIV) is able to identify which individual/ sector/region influence the draw of income inequalities above or below the average. In application, MIIV will produce a maximal outcome if it is combined with Labor Force Productivity Index. The outcome of MIIV/MIVP in Indonesia shows that the high-income inequalities in Indonesia are influenced by the contribution of regional economy, regional labor force contribution, the characteristic of regional economic sector, and regional potentials of each province. Keywords: income distribution, total, region, sector, regional sector

Structural Changes and Regional Income Inequality in Indonesia: A Bidimensional Decomposition Analysis*

Using the bidimensional decomposition method of a population-weighted coefficient of variation, this paper analyzes the changes in the determinants of interprovincial income inequality associated with structural changes in Indonesia from 1983 to 2004. The method unifies two inequality decompositions by regional groups and gross regional product components (industrial sectors) and, therefore, enables us to assess the contributions of gross regional product components to within-region and between-region inequalities, as well as to overall inequality. As the share of mining has decreased, the spatial distribution of manufacturing has played a more important role in the inequality of Sumatra and Kalimantan, while the primacy of Jakarta, with strong urbanization economies, facilitated by globalization and trade and financial liberalization, has determined much of the Java–Bali region's inequality and, therefore, overall inequality in Indonesia.

Minimum Wages and Changing Wage Inequality in Indonesia

Wage inequality in Indonesia has decreased over the last two decades. This is in contrast to many developed and developing countries, which have largely seen an increase in wage inequality over this time period. This paper investigates the extent to which minimum wage laws may have contributed to the decrease in inequality over the distribution of wages by looking at changes in individual wages, hours of work, and employment between 1993 and 2007. Besides examining wage inequality in formal sector work we also examine changes in income inequality for the self-employed sector, which comprises a substantial portion of the working population in Indonesia. We find that minimum wages are a significant determinant of increases in monthly wages for the population below the minimum wage line in the formal sector, but not the informal sector. Adverse effects are observed in terms of increases in hours of work for individuals with wages near the minimum wage line. While there are no significant effects on overall employment, we find negative effects on formal sector employment for individuals throughout the wage distribution. The results suggest that minimum wage legislation has played a role in reducing wage inequality in Indonesia.

Inequality in Indonesia: What can we learn from top incomes?

Abstract Using taxation and household survey data, this paper estimates top income shares for Indonesia during 1920–2004. Our results suggest that top income shares grew during the 1920s and 1930s, but fell in the post-war era. We observe a sharp rise in top income shares during the late-1990s, coinciding with the 1997–98 economic crisis. Where comparable data are available, top income shares in Indonesia are generally higher than in other countries, a finding that is at odds with the view that Indonesia is a relatively egalitarian society. This suggests that top income shares may provide a more complete picture of developing country inequality in comparative perspective.

Urbanization, educational expansion, and expenditure inequality in Indonesia in 1996, 1999, and 2002

This paper considers urban–rural location and education as the main factors of expenditure inequality, and attempts to examine inequality changes associated with urbanization and educational expansion in Indonesia. The urban sector's higher educational group is found to have contributed significantly to overall inequality. Its within-group inequality increased significantly. This, together with educational expansion, led to a conspicuous rise in urban inequality. Overall inequality rose, due not only to the rise in urban inequality but also a widening urban–rural disparity, accompanied by urbanization. To mitigate overall inequality, the government needs to introduce policies that could reduce inequality among households with a tertiary education.

Regional Disparity and Vertical Conflict in Indonesia

This study examines data on regional inequality in Indonesia to help explain regional unrest. Analysis indicates that the New Order regime's equalization policies produced low levels of welfare inequality by transferring wealth from resource-rich provinces to poor communities on the one hand and to Jakarta on the other. Many in the subsidizing provinces resent this strategy which has held back their regions' development. They therefore exhibit an aspiration to inequality as they seek to stop such wealth transfer and to acquire greater control over their own resources. Yet policy emphasis on the economy over development of political institutions has left the political system with no effective means to address regional grievances, which are now manifest in vertical conflicts between the centre and the regions. We therefore propose a new philosophy for equalization policies. Rather than using a development fund to distribute wealth evenly across the regions, policy should aim to equalize people's opportunities and guarantee a minimum standard of basic services for all Indonesians, without impeding the growth potential of regions.

Level of Development, Rate of Economic Growth, and Income Inequality

Previous articleNext article No AccessLevel of Development, Rate of Economic Growth, and Income InequalityJih Y. Chang and Rati RamJih Y. ChangIllinois State University Search for more articles by this author and Rati RamIllinois State University Search for more articles by this author Illinois State UniversityPDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Economic Development and Cultural Change Volume 48, Number 4July 2000 Article DOIhttps://doi.org/10.1086/452477 Views: 103Total views on this site Citations: 21Citations are reported from Crossref © 2000 by The University of Chicago. All rights reserved.PDF download Crossref reports the following articles citing this article:Arief Anshory Yusuf, Reza Anglingkusumo, Andy Sumner A direct test of Kuznets in a developing economy: a cross-district analysis of structural transformation and inequality in Indonesia, Regional Studies, Regional Science 8, no.11 (Jun 2021): 184–206.https://doi.org/10.1080/21681376.2021.1924850Iacopo Odoardi, Dario D’Ingiullo, Donatella Furia Human capital and the reduction of inequalities: an intra-national analysis in Italy, Applied Economics 52, no.5757 (Jul 2020): 6215–6228.https://doi.org/10.1080/00036846.2020.1788708Mukunda Mishra, Soumendu Chatterjee Mapping Economic Inequality, (May 2020): 121–194.https://doi.org/10.1007/978-981-15-4083-7_5Fadi Fawaz, Masha Rahnama-Moghadamm Spatial dependence of global income inequality: The role of economic complexity, The International Trade Journal 33, no.66 (Oct 2018): 542–554.https://doi.org/10.1080/08853908.2018.1535336Yasi Tian, Lei Wang Mutualism of intra- and inter-prefecture level cities and its effects on regional socio-economic development: A case study of Hubei Province, Central China, Sustainable Cities and Society 44 (Jan 2019): 16–26.https://doi.org/10.1016/j.scs.2018.09.033Fadi Fawaz, Eric Frey The impact of abundancy of resources and regime type on income inequality: The case of less-developed countries, Kasetsart Journal of Social Sciences (Jun 2018).https://doi.org/10.1016/j.kjss.2018.05.015Seung Jin Baek , ( 2018): 85.https://doi.org/10.1007/978-3-319-91394-0_4Laura Stanley, Patrick A. McLaughlin Regulation and Income Inequality: The Regressive Effects of Entry Regulations, SSRN Electronic Journal (Jan 2018).https://doi.org/10.2139/ssrn.3191390Sambuddha Ghatak, Aaron Gold Development, discrimination, and domestic terrorism: Looking beyond a linear relationship, Conflict Management and Peace Science 34, no.66 (Oct 2015): 618–639.https://doi.org/10.1177/0738894215608511Mukunda Mishra, Soumendu Chatterjee An effort of mapping the income inequality in the district of Purulia, West Bengal, India, Journal of Social and Economic Development 19, no.11 (Feb 2017): 111–142.https://doi.org/10.1007/s40847-017-0035-1Yiwen Yang, Theresa M. Greaney Economic growth and income inequality in the Asia-Pacific region: A comparative study of China, Japan, South Korea, and the United States, Journal of Asian Economics 48 (Feb 2017): 6–22.https://doi.org/10.1016/j.asieco.2016.10.008Patrick A. McLaughlin, Laura Stanley Regulation and Income Inequality: The Regressive Effects of Entry Regulations, SSRN Electronic Journal (Jan 2016).https://doi.org/10.2139/ssrn.2869155ZAINAB IFTIKHAR, AMANAT ALI IMPACT OF INCOME INEQUALITY AND DEFENCE BURDEN ON ECONOMIC GROWTH, The Singapore Economic Review 57, no.0303 (Sep 2012): 1250014.https://doi.org/10.1142/S0217590812500142ANPING CHEN, NICOLAAS GROENEWOLD Regional Equality and National Development in China: Is There a Trade-Off?, Growth and Change 42, no.44 (Nov 2011): 628–669.https://doi.org/10.1111/j.1468-2257.2011.00570.xJong-eun Lee Inequality in the globalizing Asia, Applied Economics 42, no.2323 (Sep 2010): 2975–2984.https://doi.org/10.1080/00036840801964781Jong-Eun Lee Does globalization matter to income distribution in Asia?, Applied Economics Letters 13, no.1313 (Feb 2007): 851–855.https://doi.org/10.1080/13504850500425352Jong-Eun Lee Inequality and globalization in Europe, Journal of Policy Modeling 28, no.77 (Oct 2006): 791–796.https://doi.org/10.1016/j.jpolmod.2006.04.013Anneli Kaasa Factors of Income Inequality and Their Influence Mechanisms: A Theoretical Overview, SSRN Electronic Journal (Jan 2005).https://doi.org/10.2139/ssrn.868491Dell P. Champlin, Janet T. Knoedler Embedded Economies, Democracy, and the Public Interest, Journal of Economic Issues 38, no.44 (Jan 2016): 893–907.https://doi.org/10.1080/00213624.2004.11506748Michael Bleaney, Akira Nishiyama Income inequality and growth—does the relationship vary with the income level?, Economics Letters 84, no.33 (Sep 2004): 349–355.https://doi.org/10.1016/j.econlet.2004.03.004Rodolfo Hoffmann Distribuição de renda e crescimento econômico, Estudos Avançados 15, no.4141 (Apr 2001): 67–76.https://doi.org/10.1590/S0103-40142001000100007

POVERTY AND INEQUALITY IN INDONESIA: Estimates, decomposition and key issues

POVERTY AND INEQUALITY IN INDONESIA: Estimates, decomposition and key issues

Spatial Patterns of Expenditure Inequalities in Indonesia: 1987, 1990 and 1993

This article investigates the contribution of inter-regional disparity to total national inequality in household expenditure, by decomposing national inequality into within- and between-province components. This is done by applying the Theil inequality decomposition technique to household expenditure data from the National Socio-Economic Survey. Whereas inter-provincial disparity accounted for 12–14% of total inequality among urban households and 7–8% among rural households, urban–rural disparity accounted for 22–24% of total national inequality. A Kuznets curve drawn according to the 1993 Susenas data indicates a peak inequality value of 0.27 (using Theil index T) when the share of urban households reaches 53.2%; this share is much larger than the actual 1993 urbanisation level of 32.1%. Further urbanisation is therefore likely to raise total inequality, even if other conditions remain stable.

Interregional Inequalities in Indonesia: A Sectoral Decomposition Analysis for 1975–92

In this paper we examine interregional income inequalities in Indonesia from 1975 to 1992, Williamson's weighted coefficient of variation is used to measure interregional income inequality. We also perform a sectoral decomposition analysis to investigate the extent to which industrial sectors contribute to the overall weighted coefficient of variation. One major finding is that, although interregional income inequality remained fairly stable in non-mining GDP during the study period, it has undergone a significant change in structure. The contribution of the tertiary sector to inequality, though still dominant, has gradually declined. The secondary sector, meanwhile, is playing an increasingly important role, reflecting its growing share of GDP. Inequality is much smaller in consumption expenditure than in non-mining GDP. Its consistently high levels in fixed capital formation reflect the uneven distribution of investments over space in Indonesia.

Economic Development and Income Inequality: An Overlooked Regression Constraint

Previous articleNext article No AccessEconomic Development and Income Inequality: An Overlooked Regression ConstraintRati RamRati Ram Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Economic Development and Cultural Change Volume 43, Number 2Jan., 1995 Article DOIhttps://doi.org/10.1086/452157 Views: 27Total views on this site Citations: 24Citations are reported from Crossref Copyright 1995 The University of ChicagoPDF download Crossref reports the following articles citing this article:Yuhao Sun, Shengyue Hao, Xiaofeng Long A study on the measurement and influencing factors of carbon emissions in China's construction sector, Building and Environment 229 (Feb 2023): 109912.https://doi.org/10.1016/j.buildenv.2022.109912Martin Ravallion, Shaohua Chen Is that really a Kuznets curve? Turning points for income inequality in China, The Journal of Economic Inequality 20, no.44 (Aug 2022): 749–776.https://doi.org/10.1007/s10888-022-09541-xCHI MINH HO, QUAN THAI-THUONG LE, ANH THE VO, DUC HONG VO, DAO THI-THIEU HA DOES GOVERNMENT SPENDING ON EDUCATION AFFECT PROVINCIAL INCOME INEQUALITY IN VIETNAM?, The Singapore Economic Review 66, no.0404 (Oct 2020): 1105–1123.https://doi.org/10.1142/S0217590820490065Martin Ravallion, Shaohua Chen Is that Really a Kuznets Curve? Turning Points for Income Inequality in China, SSRN Electronic Journal 1 (Jan 2021).https://doi.org/10.2139/ssrn.3913848Branimir Jovanovic When is there a Kuznets curve? Some evidence from the ex-socialist countries, Economic Systems 42, no.22 (Jun 2018): 248–268.https://doi.org/10.1016/j.ecosys.2017.06.004Ivan Lyubimov Income inequality revisited 60 years later: Piketty vs Kuznets, Russian Journal of Economics 3, no.11 (Mar 2017): 42–53.https://doi.org/10.1016/j.ruje.2017.02.003Annie Tubadji, Nataly Gnezdilova The German miracle or the miracle of the cultural attitude, International Journal of Social Economics 41, no.1111 (Nov 2014): 1014–1037.https://doi.org/10.1108/IJSE-11-2012-0211Devashish Mitra, Yiagadeesen Samy, Jean Daudelin Globalization and inequality: insights from municipal level data in Brazil, Indian Growth and Development Review 6, no.11 (Apr 2013): 128–147.https://doi.org/10.1108/17538251311329586Mohammad Zulfan Tadjoeddin Miracle that never was: disaggregated level of inequality in Indonesia, International Journal of Development Issues 12, no.11 (Apr 2013): 22–35.https://doi.org/10.1108/14468951311322091Joël Hellier, Stéphane Lambrecht Inequality, Growth and Welfare: The Main Links, (Jan 2013): 274–311.https://doi.org/10.1057/9781137283306_10Udaya R. Wagle The economic footing of the global poor, 1980-2005: The roles of economic growth, openness and political institutions, Journal of International Development 24 (Sep 2010): S173–S197.https://doi.org/10.1002/jid.1740Benaabdelaali Wail, Said Hanchane, Abdelhak Kamal A New Data Set of Educational Inequality in the World, 1950-2010: Gini Index of Education by Age Group, SSRN Electronic Journal (Jan 2011).https://doi.org/10.2139/ssrn.1895496Jong-eun Lee Inequality in the globalizing Asia, Applied Economics 42, no.2323 (Sep 2010): 2975–2984.https://doi.org/10.1080/00036840801964781Douglas O. Walker Patterns of income distribution among world regions, Journal of Policy Modeling 29, no.44 (Jul 2007): 643–655.https://doi.org/10.1016/j.jpolmod.2007.05.012Chun-Hung A. Lin Education Expansion, Educational Inequality, and Income Inequality: Evidence from Taiwan, 1976–2003, Social Indicators Research 80, no.33 (Aug 2006): 601–615.https://doi.org/10.1007/s11205-006-0009-8Timothy Patrick Moran Kuznets’s Inverted U-Curve Hypothesis: The Rise, Demise, and Continued Relevance of a Socioeconomic Law, Sociological Forum 20, no.22 (Jun 2005): 209–244.https://doi.org/10.1007/s11206-005-4098-yRaymond Raab, Pradeep Kotamraju, Stephen Haag Efficient provision of child quality of life in less developed countries: conventional development indexes versus a programming approach to development indexes, Socio-Economic Planning Sciences 34, no.11 (Mar 2000): 51–67.https://doi.org/10.1016/S0038-0121(99)00013-0Ravi Kanbur Chapter 13 Income distribution and development, (Jan 2000): 791–841.https://doi.org/10.1016/S1574-0056(00)80016-0Takahiro AKITA, Rizal Affandi LUKMAN, Yukino YAMADA INEQUALITY IN THE DISTRIBUTION OF HOUSEHOLD EXPENDITURES IN INDONESIA: A THEIL DECOMPOSITION ANALYSIS, The Developing Economies 37, no.22 (Mar 2007): 197–221.https://doi.org/10.1111/j.1746-1049.1999.tb00231.xOctavian Ngarambé, Stephan J. Goetz, David L. Debertin Regional Economic Growth and Income Distribution: County-Level Evidence from the U.S. South, Journal of Agricultural and Applied Economics 30, no.22 (Apr 2015): 325–337.https://doi.org/10.1017/S1074070800008324 Martin Ravallion A Comment on Rati Ram's Test of the Kuznets Hypothesis Ravallion, Economic Development and Cultural Change 46, no.11 (Jul 2015): 187–190.https://doi.org/10.1086/452327 Rati Ram Reply to the Comment on Rati Ram's Test of the Kuznets Hypothesis Ram, Economic Development and Cultural Change 46, no.11 (Jul 2015): 191–195.https://doi.org/10.1086/452328P. J. Dawson On testing Kuznets' economic growth hypothesis, Applied Economics Letters 4, no.77 (Jul 1997): 409–410.https://doi.org/10.1080/135048597355159Zaki Eusufzai The Kuznets hypothesis: An indirect test, Economics Letters 54, no.11 (Jan 1997): 81–85.https://doi.org/10.1016/S0165-1765(96)00900-7

Inequality Trends in Indonesia, 1969–1981: A Re-Examination1

This paper attempts to clarify the debate over trends in inequality in Indonesia from 1969 to 1981, by adjusting die standard inequality measures for the differential impact of inflation on different expenditure groups. It is shown that, once such adjustment is made, inequality increased in Indonesia between 1969/70 and 1976, but declined between 1976 and 1981. Adjustments are also made to the inequality indicators for urban and rural areas, and for Java and the Outer Islands. 1 This paper is abstracted from Chapter 4 of the author's unpublished thesis, entitled Distributional Impacts of Economic Growth: The Case of Indonesia, 1969/1970 – 1981, Griffith University. The article was prepared while I was a visitor in the Department of Economics, RSPacS, AND. I would like to thank the Indonesia Project for financial support during the visit.

Inpresand Inequality: A Distributional Perspective on the Centre's Regional Disbursements1

Central government funding of local expenditures under the Inpres programs is a potentially important policy instrument for redressing regional inequalities in Indonesia. This paper examines the implicit distributional objectives underlying Inpres. The scheme is modelled as the outcome of a constrained social choice problem facing the centre. An econometric model of Inpres allocations is used to identify the centre's implicit social preferences over alternative regional distributions of consumption. Mild absolute-inequality aversion is revealed, although it is somewhat swamped by province-specific preference factors related to population size and density. No other local welfare indicators appear to influence Inpres allocations.

Spatial Patterns of Inequality and Poverty in Indonesia

The paper uses data from the 1976 Household Expenditure Survey (Susenas) to examine spatial patterns of poverty and inequality in Indonesia. A number of inequality measures are computed for each province (Gini Ratio. Atkinson Index, Theil Index, L-Index) and provincial rankings according to each index are compared. Provinces are also ranked according to a number of poverty indexes, using a poverty line adjusted for differences in price levels, between provinces. The correlation between selected measures of poverty and inequality is also investigated and some implications for regional development policy discussed.

GROWTH, STABILITY, BUT WHAT ABOUT EQUITY? REASSESSING INDONESIAN INEQUALITY FROM A COMPARATIVE PERSPECTIVE

ABSTRACT Inequality estimates derived from household consumption expenditure surveys (Susenas) suggest that economic inequality in Indonesia was comparatively moderate during the rapid economic transition in the Suharto era (1966–1998). Yet the expenditure distribution concept and problems of underreporting and selection bias constrain meaningful international inequality comparisons. This paper reassesses Indonesian inequality from a comparative perspective employing various alternative data sources and indicators. A comparison with Brazil, Mexico and the US reveals that Indonesian inequality levels are generally closer to Latin American levels than to US levels. Except for large short-term fluctuations, we did not find an overall increasing or decreasing inequality tendency between 1966 and 1998.