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Urbanization and Expenditure Inequality in Indonesia: Testing the Kuznets Hypothesis with Provincial Panel Data

Perdamen Sagala (), Takahiro Akita and Arief Yusuf ()
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Perdamen Sagala: Graduate School of International Relations International University of Japan

No 201318, Working Papers in Economics and Development Studies (WoPEDS) from Department of Economics, Padjadjaran University

Abstract: Focusing on Indonesia, this study analyzes the relationship between inequality and the process of urbanization. Itperforms a panel data regression analysis to test the Kuznets inverted-U hypothesis for urbanization based on a provincial panel data set of 33 provinces over the period 2000-2009, constructed by using the core National Socio-economic Survey (core Susenas). Our results support the Kuznets inverted-U hypothesis, whether the Gini coefficient or the Theil indices are used as a measure of inequality. According to our estimates, expenditure inequality would reach the peak at an urbanization rate of around 46-50%. Since the 2010 urbanization rate is 50%, this indicates that expenditure inequality has already attained the peak value. Thus, further urbanization would decrease expenditure inequality, but all other things being equal.

Keywords: urbanization; expenditure inequality; Kuznets hypothesis; panel data regression; Indonesia (search for similar items in EconPapers)
JEL-codes: O18 R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-sea and nep-ure
Date: 2013-10, Revised 2013-10
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Related works:
Working Paper: Urbanization and Expenditure Inequality in Indonesia: Testing the Kuznets Hypothesis with Provincial Panel Data (2016) Downloads
Journal Article: Urbanization and expenditure inequality in Indonesia: testing the Kuznets hypothesis with provincial panel data (2014) Downloads
Working Paper: Urbanization and Expenditure Inequality in Indonesia: Testing the Kuznets Hypothesis with Provincial Panel Data (2013) Downloads
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