Analysis of Welfare in Indonesia: Case Study in 2008-2017

Zenodo (CERN European Organization for Nuclear Research), 2022

This study aims to analyze and empirically prove the effect of economic growth, fiscal decentralization, trade, and the basic sector on inequality in Sumatra Island, Indonesia. The data used is panel data with 154 regencies/cities on the Sumatra Island for ten years (2011-2020), and the data processing technique used is the econometric model of multiple linear equations (multiple regression) for panel data. The results of the study found that the variables of economic growth and fiscal decentralization were negatively and significantly correlated with inequality on the Sumatra Island. Meanwhile, the trade variable is positively and significantly correlated with inequality. There are the base sector dummy variable shows a significant effect on inequality. This study has limitations, that is using only four independent variables (economic growth, fiscal decentralization, trade, and the basic sector) so that there are other factors or variables outside the model that can also affect the dependent variable (inequality). The contribution given from this research is as input as well as evaluation for interested parties in making policies so that they can produce more targeted policies in an effort to reduce inequality, especially for regional governments on the Sumatra Island.

Economic Journal of Emerging Markets, 2017

This study examines whether changing economic structure, social conditions, and financialization are responsible for increased income inequality in Indonesia. By employing panel data of 32 provinces in Indonesia that spans from 2007 to 2013, it finds that structural change affects income inequality, increased share of finance reduces inequality, which is against the financialization hypothesis, and social conditions have expected effects on income inequality. While an increased share of both agriculture and service sectors tends to reduce inequality, an increased share of manufacture sector has no effect on inequality. This study finds that falling poverty increases inequality, implying that policy to reduce poverty might not be neutral for inequality and instead cannot prevent it from increasing. Since the higher the college participation rate the higher income inequality tends to be, it does not automatically imply that in order to reduce inequality we need to reduce the number of people who go to college. It might be the case that the college participation rate has not reached a turning point, below which its increase increases inequality, but beyond which its increases reduces inequality. Abstrak Penelitian ini mengkaji pengaruh perubahan struktur ekonomi, finansialisasi, dan kondisi sosial terhadap ketimpangan pendapatan. Menggunakan data panel dengan cross-section 32 propinsi di Indonesia dan rentang waktu 2007-2013, penelitian ini menemukan bahwa perubahan struktural mempengaruhi ketimpangan, kenaikan sumbangan sektor keuangan dalam PDB cenderung menurunkan ketimpangan, yang berarti bertentangan dengan hipotesis finansialisasi, dan kondisi sosial juga berpengaruh terhadap ketimpangan. Sementara kenaikan sumbangan baik sektor pertanian maupun sektor jasa dalam PDB cenderung mengurangi ketimpangan, kenaikan sumbangan sektor industri terbukti tidak mempengaruhi ketimpangan. Studi ini juga menemukan bahwa turunnya tingkat kemiskinan justru manaikkan ketimangan, sehingga kebijakan untuk menurunkan kemiskinan bisa bersifat tidak netral terhadap ketimpangan, melainkan tidak mampu membiarkan ketimpangan untuk tidak naik. Juga ditemukan bahwa kenaikan angka partisipasi kuliah justru menaikkan ketimpangan, yang mengimplikasikan bahwa angka ini belum mencapai titik belok (turning point).

This paper examines factors that are associated with disparities in regional poverty in Indonesia during the second half of the decentralization decade, from 2006 to 2011. Some of these variables can be shown to be causal, i.e., they explain the differences in poverty incidence. The paper incorporates the role of province-specific characteristics, which cover variables such as income, types of income, human capital, living condition and access to infrastructure, intergovernmental transfers, and interprovincial migration as possible factors of variations in poverty among provinces. The results of our analysis of panel data at the provincial level show that not only growth in income, particularly in the services sector (which grew the fastest during the decentralization period) and from nonfood crops, but also growth in human capital investments, played important roles in reducing poverty during this period.

Asean Economic Bulletin, 2006

Regional income per capita disparity has become a crucial topic in Indonesia since the beginning of the 1990s. However, the main reasons for the existence of this income disparity remain a puzzle. This paper utilizes a panel data technique and the general specification growth model to estimate the provincial growth of income per capita in Indonesia for the 1993-2002 period to investigate the determinants of the country's regional income disparity. The main findings are, first, despite the existence of regional income disparity, there is a conditional regional income per capita growth convergence; and second, saving of physical capital, trade openness and the contribution of the gas and oil sectors are the determinants of this provincial income per capita growth.

Jambura Equilibrium Journal

The existence of differences in resources and processes in the implementation of development in a region causes the ability of each region to encourage the development process also to be different, which causes problems of development inequality between regions. Therefore, an analysis of regional development disparities needs to be carried out. This study aims to analyze the effect of local government spending, the Human Development Index (HDI), and economic growth on regional development inequality in Eastern Indonesia in 2015-2020. This research approach uses a quantitative approach. The data type used is panel data, 12 Provinces in Eastern Indonesia for six years (2015-2020). The analysis tool uses panel data regression with a Fixed Effect Model approach. The results indicate that the variables of government spending on education, health, infrastructure, and human development index directly affect regional development inequality. Meanwhile, the economic growth variable does not a...

JDE (Journal of Developing Economies), 2022

The image of development in Indonesia is getting worse when development progress is felt by the upper class. The segmentation of the upper and lower levels of society is reflected in the gap between life in the village and the city. The purpose of this study is to analyze the determinants of income inequality based on the classification of villages, cities, and between villages and cities in Indonesia. The data analysis method used is panel data regression which is an analytical technique that is observed over a certain period. The data used is annual secondary data from 2016-2020 in 34 provinces of Indonesia. Inequality analysis is carried out by calculating the Gini index based on household expenditure data. Economic growth, population, human development index, domestic investment, technology development index, and employment opportunities are independent variables. The results of this study found that there was a significant negative relationship the technology development index and positive relationship population in city and between village and city areas. Then the variable employment opportunity have a significant negative relationship to income inequality in the village.

2021

Purpose: to analyze the effect of population, minimum wages and unemployment on inequality of income distribution in Indonesia. This study uses secondary data in the form of panel data consisting of time crosses for the period 2009-2013 and cross places in 33 provinces in Indonesia Design/methodology/approach: The analysis carried out is a quantitative analysis using multiple linear regression to answer the problem formulation and determine the effect of predetermined variables. Findings: All independent variables are said to have a joint (simultaneous) influence on the dependent variable because it is seen from the level of significance that the number is 0.002 less than 0.05, which means that there is a significant effect simultaneously between the population, minimum wages and unemployment on inequality of income distribution. in Indonesia the period 2009-2013. There is a partially significant effect between the minimum wage and the inequality of income distribution. The minimum ...

Journal of Social and Development Sciences, 2015

In many countries, include Indonesia, a centralized government has a sizeable negative impact on inequality of development. During the New Regime Order era with a centralized system, Indonesia's development is concentrated in the western part of Indonesia which had led to inequality in terms of per capita income and human development. To solve these problems, one of the economic reforms undertaken by the Indonesia government is changes the system from a centralized to a decentralized system. Through the fiscal decentralization under Law No. 22/99 and 25/99, they hope to improve people's welfare and reduce inequality. This research is aim to assess the effect of government spending and investment on the growth of per capita income and see the effect of the growth of per capita income towards Human Development Index (HDI). The method used is multiple regression with panel data and the study from year 2007-2012 by dividing the two groups of regions ie: western Indonesia and cen...

Jurnal Perencanaan Pembangunan: The Indonesian Journal of Development Planning, 2017

Income inequality in Indonesia has rapidly enlarged in recent years. This paper aims to examine the causes of highly persistent income inequality in Indonesia. In contrast to other previous studies that investigated income inequality focusing only on economic factors, this paper also looks at social and political elements. Using Ordinary Least Square (OLS) method, I found that democracy has no significant impact on income inequality. In addition, the study found a significant relationship between government spending and income inequality. In addition, I also found evidence that foreign direct investment (FDI) flows have an impact to improve income inequality in Indonesia. There are several relevant policy conclusions that can be drawn from this study.

2019

Since inequality of income is likely inevitable in almost all countries, the purpose of this study is to investigate factors that affect inequality of income in Indonesia in the era of post Asian economy crisis. The model proposed in this study was tested by regression using time series data started from 2002 to 2017. The results show that inequality of income in Indonesia is affected negatively and significantly by tourism, ratio of school participation and social protection spent by government. It indicates that those three variables have been well done in spreading out to low income segment. Besides, there is also negative relationship to inequality of income, that is, GDP per Capita, but not significant, indicating this independent variable is not strong enough in affecting inequality of income. Inequality of income is also positively and significantly affected by government spending for infrastructure, indicating spending by government on infrastructure has not been spread out ...

Paper was presented at the N-AERUS Workshop, 2008

Since its independence, Indonesia has developed fluctuated and uneven. The financial crisis and political changes has lead to decentralization in 1999, which has entitled local governments (province and regency/municipality) to develop its region autonomously. Surprisingly, it was concern that the decentralization will increase the disparities, rather than decrease it. This research uses Indonesia disparities in the province level. Using regression analysis we will overview Indonesian provinces disparities and poverty rate to overview the economic growth after decentralization. Overall, this research aims to shows the economic performance of Indonesia regions and highlight determinant factors that impacts poverty rate. This research lays in the Poverty reduction theory and ideology within a context of globalization sub-theme because it studies on the approach that Indonesia government took to solve disparities and encourages poor regions to advance its development.

2022

Researchers found that the decrease in income inequality affects poverty reduction through redistribution policies. This redistribution policy has also accelerated poverty reduction. In addition, the researcher found that the element of growth led to the achievement of poverty reduction in the long term. Researchers show that economic growth has the power to determine poverty reduction. The type of data in this study uses secondary data sourced from the Central Statistics Agency (BPS), namely Gross Regional Domestic Product (GRDP) at Constant Prices (ADHK) 2010, Number of Poor Populations, and Gini Ratio by Provinces in Indonesia during the period 2015-2020. The analytical method used is panel data regression using three forms, namely: CEM (common effect model), FEM (fixed-effect model), and REM (random effect model). Based on the empirical findings using panel data regression, it can be concluded that the variables of economic growth (LOGPDRB) and income inequality (GIN) are consistent with various panel regression models as well as the common effect model (CEM), fixed effect model (FEM) and random effect. In addition, the model (REM) positively affects the number of poor people. It means that if the two variables increase, there will also be an increase or increase in the number of poor people according to the provinces in Indonesia.

At-tijaroh: Jurnal Ilmu Manajemen dan Bisnis Islam

The area to be built must be evenly distributed in Indonesia, uneven development causes jealousy and dissatisfaction between regions. based on this will be detrimental to the development that a region wants to achieve. The formulation of the problem in this study is whether there is an influence of economic growth in population and the human development index on development inequality in the province of North Sumatra. The type of research used in this research is quantitative research. The results of the study indicate that the economic growth of the population has an effect on development inequality. While the human development index has no effect on development inequality.

Daengku: Journal of Humanities and Social Sciences Innovation

This study aims to determine and analyze the influence of economic growth, government capital expenditure, and human development index on the inequality of income distribution in Metropolitan Cities in Indonesia. This type of research is descriptive associative research, where the data used is secondary data from 2012 to 2021 obtained from relevant agencies, which were analyzed using the panel data regression method. The findings of this study indicate that the human development index has a negative and significant effect on the inequality of income distribution in Metropolitan Cities in Indonesia, capital expenditures and economic growth have a positive and insignificant effect on the inequality of income distribution in Metropolitan Cities in Indonesia. Taken together, only the human development index has a significant effect on the inequality of income distribution in Metropolitan Cities in Indonesia.

Jurnal Media Ekonomi (JURMEK), 2020

This study determine the effect of Gross Domestic Product (GDP), education level and unemployment rate on the poverty in the South Sumatra Province in year of 2013 – 2018. The method uses panel data analysis using Eviews program with combination time-series data and cross-section data using panel data through fixed effects Model. The data obtained from the Central Statistic Bureau of Indonesia. The results showed that the GDP variable and the education level are negative and significant effect on poverty in the South Sumatra Province, the unemployment level is positive and significant effect on poverty in the South Sumatra. The information and the policy considerations related parties to improve the system of growth and development in the South Sumatra especially, and Indonesia in general.