Fiscal Decentralization, Regional Income Inequality, and the Provision of Local Public Goods: Evidence from Indonesia

Matondang Siburian ()

No 2001, Working Papers from Waseda University, Faculty of Political Science and Economics

Abstract: The objective of this paper is to clarify the potential joint determination between fiscal decentralization, regional inequality, and the provision of local public goods in Indonesia. Using provincial-level data over the period 2001-2014, we estimate the simultaneous equation model (SEM) to circumvent the possibility of interdependence between the interest variables. The result reveals that fiscal decentralization is associated with lower regional income disparity but not vice versa. The result confirms that regional income inequality and the provision of public goods are simultaneously determined. The result provides no evidence of interdependence between fiscal decentralization and the provision of local public goods.

Keywords: fiscal decentralization; regional inequality; local public goods; Indonesia; simultaneous equation model (search for similar items in EconPapers)
JEL-codes: H10 H70 H77 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2020-05
New Economics Papers: this item is included in nep-cwa, nep-pbe, nep-sea and nep-ure
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Related works:
Journal Article: Fiscal Decentralization, Regional Income Inequality, and the Provision of Local Public Goods: Evidence from Indonesia (2021)
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