Income Inequality Amidst Economic Growth: A Democratic Intervention Analysis in Indonesia’s Urban Context

Rahmat Arsyad (), Basri Hasanuddin, Agussalim Agussalim and Sanusi Fattah
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Rahmat Arsyad: Wira Bhakti University
Basri Hasanuddin: Hasanuddin University
Agussalim Agussalim: Hasanuddin University
Sanusi Fattah: Hasanuddin University

A chapter in Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024), 2025, pp 97-104 from Springer

Abstract: Abstract Income inequality remains a pressing issue in Indonesia, particularly in urban areas, despite notable economic growth. This study examines how democracy moderates the relationship between economic growth and income inequality in Indonesia’s urban context. Using panel data from 33 provinces between 2014 and 2023, the research applies Moderated Regression Analysis (MRA) to assess the interaction of Economic Growth (X), Income Inequality (Y), and Democracy (Z). The results show that while economic growth alone does not significantly reduce income inequality, democracy plays a crucial role in moderating this relationship, enhancing the positive impact of growth on reducing inequality. This suggests that higher levels of democracy can make economic growth more inclusive by distributing its benefits more equitably. The findings emphasize the importance of maintaining strong democratic institutions to address the challenges of wealth disparity in rapidly growing economies like Indonesia. This study provides actionable insights for policymakers aiming to reduce inequality through more democratic governance frameworks.

Keywords: Income Inequality; Economic Growth; Democracy; Moderated Regression Analysis (MRA) (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-758-8_9

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DOI: 10.2991/978-94-6463-758-8_9

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