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A Reassessment of Inequality and Its Role in Poverty Reduction in Indonesia

Daniel Suryadarma, Rima Artha, Asep Suryahadi and Sudarno Sumarto ()

Development Economics Working Papers from East Asian Bureau of Economic Research

Abstract: This study provides an overview of inequality in Indonesia for the period of 1984 to 2002 using several widely used measurements of inequality. Firstly, unlike previous studies, our paper uses real consumption expenditure that takes into account the high regional price disparity across regions in Indonesia. Secondly, we found that, although during the crisis all measures indicate a decrease in inequality, it actually increased for those below the poverty line. Finally, this study also provides an estimation of distribution corrected growth elasticity of poverty for Indonesia. This proves to be an important explanation for the fact that the poverty rate decreased very rapidly between 1999 and 2002 : because inequality during the peak of the economic crisis in 1999 was at its lowest level in 15 years.

Keywords: Inequality; real consumption expenditure; regional price disparity; growth elasticity of poverty; economic crisis; Indonesia (search for similar items in EconPapers)
JEL-codes: D63 E21 I31 (search for similar items in EconPapers)
Date: 2005-01
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