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Twenty Years of Expenditure Inequality in Indonesia, 1993–2013

Arief Yusuf (), Andy Sumner () and Irlan Rum
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Andy Sumner: King's International Development Institute, King's College London

No 201314, Working Papers in Economics and Development Studies (WoPEDS) from Department of Economics, Padjadjaran University

Abstract: In this article, we consider the recent increase in inequality in Indonesia. We make new, consistent estimates of expenditure inequality for 1993–2013, using several measures that draw on household expenditure data from the National Socioeconomic Survey (Susenas) for 1993–2013. In doing so, we note that the central statistics agency, Badan Pusat Statistik (BPS), used grouped data for its estimates of inequality until 2009 and that this underestimated inequality up to then. Thus the rise in inequality reported since 2009 actually has a longer history. We argue that Indonesia experienced divergence and convergence at the same time: the magnitude of the rise in inequality was significant (divergence), but the rise was greatest in provinces or districts with low initial levels of inequality (convergence). We consider the literature on drivers of changes in inequality and identify a set of hypotheses, with an empirical basis, which we introduce as potential Indonesian-specific drivers of rising inequality for future exploration.

Keywords: Inequality; Gini; Theil (search for similar items in EconPapers)
JEL-codes: D63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa, nep-dev and nep-sea
Date: 2013-08, Revised 2014-07
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http://ceds.feb.unpad.ac.id/wopeds/201314.pdf First version, 2013 (application/pdf)

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