IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2022-03-4.html
   My bibliography  Save this article

Income Inequality in Indonesia: Before and during the Covid-19 Pandemic

Author

Listed:
  • Tanti Novianti

    (Department of Economics, Faculty of Economics and Management, IPB University, Indonesia.)

  • Dian Verawati Panjaitan

    (Department of Economics, Faculty of Economics and Management, IPB University, Indonesia.)

Abstract

Growth and inequality are economic indicators that are strongly linked to the development process. Regional inequality has long been an issue in Indonesia. This study aims to analyze inequality and economic growth at the city/district level throughout Indonesia before and during the COVID-19 pandemic. It uses secondary data sourced from the Central Statistics Agency (BPS) from 2017 to 2020. The analyzed GRDP and GRDP per capita data consist of 514 cities/districts and 34 provinces. The analytical method used is the Theil Index and Williamson Index (IW). The results revealed that the level of income inequality, calculated based on Theil's Index, was 0.258 in 2019. That value increased to 0.516 in 2020. From 2017 to 2020, the level of inequality in Indonesia increased, followed by inequality within the province itself (within-group), while inequality between provinces (between-group) tended to decrease. The contribution of inequality within the province (within-group) is 53%-63% to the national Theil Index, the rest comes from inequality between groups (between provinces).

Suggested Citation

  • Tanti Novianti & Dian Verawati Panjaitan, 2022. "Income Inequality in Indonesia: Before and during the Covid-19 Pandemic," International Journal of Economics and Financial Issues, Econjournals, vol. 12(3), pages 29-37, May.
  • Handle: RePEc:eco:journ1:2022-03-4
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijefi/article/download/12996/6725
    Download Restriction: no

    File URL: https://www.econjournals.com/index.php/ijefi/article/view/12996
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Philipp Heimberger, 2020. "Does economic globalisation affect income inequality? A meta‐analysis," The World Economy, Wiley Blackwell, vol. 43(11), pages 2960-2982, November.
    2. Mazhar Mughal, 2010. "Explaining income inequalities in the developing countries- the role of human capital," Post-Print hal-01881841, HAL.
    3. Nicholas Apergis & Oguzhan Dincer & James E. Payne, 2011. "On the dynamics of poverty and income inequality in US states," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 38(2), pages 132-143, May.
    4. Cysne, Rubens Penha & Turchick, David, 2012. "Equilibrium unemployment-inequality correlation," Journal of Macroeconomics, Elsevier, vol. 34(2), pages 454-469.
    5. Mincer, Jacob, 1970. "The Distribution of Labor Incomes: A Survey with Special Reference to the Human Capital Approach," Journal of Economic Literature, American Economic Association, vol. 8(1), pages 1-26, March.
    6. Chun-Hung Lin, 2007. "Education Expansion, Educational Inequality, and Income Inequality: Evidence from Taiwan, 1976–2003," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 80(3), pages 601-615, February.
    7. M. Kemal Biçerli & Merve Kocaman, 2019. "The Impact Of Minimum Wage On Unemployment, Prices, And Growth: A Multivariate Analysis For Turkey," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 64(221), pages 65-84, April – J.
    8. Banerjee, Asis Kumar, 2010. "A multidimensional Gini index," Mathematical Social Sciences, Elsevier, vol. 60(2), pages 87-93, September.
    9. Madsen, Jakob & Strulik, Holger, 2020. "Technological change and inequality in the very long run," European Economic Review, Elsevier, vol. 129(C).
    10. Checchi, Daniele, 2000. "Does Educational Achievement Help to Explain Income Inequality?," WIDER Working Papers 295540, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    11. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    12. Sadegh Bakhtiari & Hossein Meisami, 2010. "An empirical investigation of the effects of health and education on income distribution and poverty in Islamic countries," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 37(4), pages 293-301, March.
    13. Mohamed Bouincha & Mohamed Karim, 2018. "Income Inequality and Economic Growth: An Analysis Using a Panel Data," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(5), pages 242-253, May.
    14. Thorvaldur Gylfason & Gylfi Zoega, 2003. "Education, Social Equality and Economic Growth: A View of the Landscape," CESifo Economic Studies, CESifo Group, vol. 49(4), pages 557-579.
    15. Mazhar Mughal, 2010. "Explaining income inequalities in the developing countries- the role of human capital," Post-Print hal-01881841, HAL.
    16. Era Dabla-Norris & Kalpana Kochhar & Nujin Suphaphiphat & Franto Ricka & Evridiki Tsounta, 2015. "Causes and Consequences of Income Inequality; A Global Perspective," IMF Staff Discussion Notes 15/13, International Monetary Fund.
    17. Yang, Juan & Qiu, Muyuan, 2016. "The impact of education on income inequality and intergenerational mobility," China Economic Review, Elsevier, vol. 37(C), pages 110-125.
    18. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 281-281.
    19. Ms. Era Dabla-Norris & Ms. Kalpana Kochhar & Mrs. Nujin Suphaphiphat & Mr. Franto Ricka & Ms. Evridiki Tsounta, 2015. "Causes and Consequences of Income Inequality: A Global Perspective," IMF Staff Discussion Notes 2015/013, International Monetary Fund.
    20. Castillo, Luis, 2020. "Regional Dynamics of Income Inequality in Peru," Working Papers 2020-004, Banco Central de Reserva del Perú.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Takahiro Akita & Armida Salsiah Alisjahbana, 2023. "The Initial Impacts of the COVID-19 Pandemic on Regional Economies in Indonesia: Structural Changes and Regional Income Inequality," Sustainability, MDPI, vol. 15(18), pages 1-19, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vachaspati Shukla & Udaya S. Mishra, 0. "Expansion in Education and Its Impact on Income Inequality: Cross-sectional Evidence from India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 0, pages 1-32.
    2. Vachaspati Shukla & Udaya S. Mishra, 2020. "Expansion in Education and Its Impact on Income Inequality: Cross-sectional Evidence from India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(2), pages 331-362, June.
    3. Eva Militaru & Madalina Ecaterina Popescu & Amalia Cristescu & Maria Denisa Vasilescu, 2019. "Assessing Minimum Wage Policy Implications upon Income Inequalities. The Case of Romania," Sustainability, MDPI, vol. 11(9), pages 1-20, May.
    4. Bucevska Vesna, 2019. "Determinants of Income Inequality in EU Candidate Countries: A Panel Analysis," Economic Themes, Sciendo, vol. 57(4), pages 397-413, December.
    5. Hiroaki Hayakawa & Yannis P. Venieris, 2019. "Duality in human capital accumulation and inequality in income distribution," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(3), pages 285-310, September.
    6. Mohsen Ayyash & Siok Kun Sek, 2020. "Decomposing Inequality in Household Consumption Expenditure in Malaysia," Economies, MDPI, vol. 8(4), pages 1-15, October.
    7. Perri, T. J., 2003. "The cost of specialized human capital," Economics of Education Review, Elsevier, vol. 22(4), pages 433-438, August.
    8. Onur Özdemir, 2023. "The determinants of income distribution: the role of progress in human capital," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(5), pages 4193-4227, October.
    9. Barry R. Chiswick, 2006. "Jacob Mincer, Experience and the Distribution of Earnings," Springer Books, in: Shoshana Grossbard (ed.), Jacob Mincer A Pioneer of Modern Labor Economics, chapter 10, pages 109-126, Springer.
    10. Filipe Almeida-Santos & Yekaterina Chzhen & Karen Mumford, 2010. "Employee training and wage dispersion: white- and blue-collar workers in Britain," Research in Labor Economics, in: Jobs, Training, and Worker Well-being, pages 35-60, Emerald Group Publishing Limited.
    11. Andrés Rodríguez‐Pose & Vassilis Tselios, 2009. "Education And Income Inequality In The Regions Of The European Union," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 411-437, August.
    12. Tamara Maria Nae & Margareta-Stela Florescu & Gabriela-Ioana Bălășoiu, 2024. "Towards Social Justice: Investigating the Role of Labor, Globalization, and Governance in Reducing Socio-Economic Inequality within Post-Communist Countries," Sustainability, MDPI, vol. 16(6), pages 1-16, March.
    13. Chu, Lan Khanh & Hoang, Dung Phuong, 2020. "How does economic complexity influence income inequality? New evidence from international data," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 44-57.
    14. Andrén, Daniela & Palmer, Edward, 2001. "The Effect Of Sickness On Earnings," Working Papers in Economics 45, University of Gothenburg, Department of Economics.
    15. Barhoom Faeyzh, 2023. "Revisiting the Financial Development and Income Inequality Nexus: Evidence from Hungary," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 11(1), pages 227-257, October.
    16. Cut Risya Varlitya & Raja Masbar & Abd. Jamal & Muhammad Nasir, 2023. "Do Regional Macroeconomics Variables Influence the Income Inequality in Indonesia?," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 180-199.
    17. Roxana Gutiérrez-Romero, 2017. "How does inequality affect long-run growth?," Working Papers 84, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    18. Sofia Vale & Francisco Camões, 2023. "Households’ Exposure to the Financial Sector as a Driver of Inequality: An Analysis of Advanced and Emerging Economies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(2), pages 362-402, June.
    19. Yeycol Leiva & Gabriel Pino, 2020. "Analysis of the impact of school performance on income inequality in the long run: An application to Chilean municipalities," Growth and Change, Wiley Blackwell, vol. 51(3), pages 1045-1080, September.
    20. Giacomo DiPasquale, 2022. "The Effects of International Immigration on Inequality in Host Countries: the Case of Italy," Journal of International Migration and Integration, Springer, vol. 23(4), pages 1793-1824, December.

    More about this item

    Keywords

    inequality; economic growth; Williamson index; Theil index;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2022-03-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.