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Was It Really “Growth with Equity” under Soeharto? A Theil Analysis of Indonesian Income Inequality, 1961-2002

Author

Listed:
  • Ewout Frankema

    (Utrecht University)

  • Daan Marks

    (International Institute of Social History, Amsterdam)

Abstract

For over three decades (1966-1998) socio-economic policies in Indonesia were founded on Soeharto’s development trilogy “growth, stability and equity”. Literature agrees that the policy goals of growth and stability were met by and large, but remains inconclusive about equity. In this paper we estimate Theil indices of sector income distribution to evaluate the impact of structural change on the trend of Indonesian income inequality for the period 1961-2002. Where conventional Gini-coefficients based on household expenditure surveys suggest that Indonesian income equality is comparatively confined and reveals no long run tendency in either upward or downward direction, our results indicate that inter and intra-sector income inequality increased rapidly under Soeharto, as well as the share of the labour force engaged in informal sector activities.

Suggested Citation

  • Ewout Frankema & Daan Marks, 2009. "Was It Really “Growth with Equity” under Soeharto? A Theil Analysis of Indonesian Income Inequality, 1961-2002," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 57, pages 47-77, April.
    • Handle: RePEc:lpe:efijnl:200903
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    Keywords

    Indonesia; Income Distribution; Theil index;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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