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

Takahiro Akita and Rizal Affandi Lukman

Bulletin of Indonesian Economic Studies, 1999, vol. 35, issue 2, 67-90

Abstract: 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.

Date: 1999
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DOI: 10.1080/00074919912331337597

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