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Inequality Determination in Central Java, Indonesia

Rusli Abdulah ()

MPRA Paper from University Library of Munich, Germany

Abstract: The attention of economist to the problem of inequality is weak. This condition is followed by the world institution (World Bank and UNDP) which concerns in the areas of poverty, as well as our government. The impact of biased policy between poverty and inequality reduction can be seen from the data. In Indonesia, especially Central Java, during the period of 2002 to 2011, economic growth in Central Java increased accompanied by poverty reduction. However inequality increased. The purpose of the study is to analyze the determinant of inequality income in Central Java from 2002 up to 2011. Panel data regression method is used to achieve the objectives of this study. There are 35 cross section data represent every regency and 10-years data series. F test and Hausman test indicate that restricted random effect models are best for analysis. The result shows that there are only two significant variables that determine inequality (share of economic output received by employers wages). Meanwhile, the other two variables are not significant (urbanization and dependency ratio).

Keywords: Inequality; Panel Data; Random Effect (search for similar items in EconPapers)
JEL-codes: C23 D63 (search for similar items in EconPapers)
Date: 2013-01-02
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Published in JEJAK Journal of Economics and Policy 6.1(2013): pp. 42-53

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