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Effect of economic growth on income inequality, labor absorption, and welfare

Author

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  • Erni Panca Kurniasih

    (Faculty of Economics and Business, Universitas Tanjungpura, Pontianak, Indonesia.)

Abstract

This research aims to analyze the effect of economic growth on income inequality, labor absorption and economic welfare in Indonesian provinces. A 165 observations of panel data was analyzed using path analysis. The result showed that the economic growth has significant negative effect on income inequality in Indonesian provinces but it has no significant effect on both labor absorption and economic welfare. The labor absorption has significant positive effect on income inequality even though it has no significant effect on economic welfare. In addition, the economic welfare is not significantly influenced by the income inequality.

Suggested Citation

  • Erni Panca Kurniasih, 2017. "Effect of economic growth on income inequality, labor absorption, and welfare," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 9(2), pages 181-188, April.
    • Handle: RePEc:uii:journl:v:9:y:2017:i:2:p:181-188
    DOI: 10.20885/ejem.vol9.iss2.art7
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    References listed on IDEAS

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    3. Amartya Sen, 2005. "Human Rights and Capabilities," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 6(2), pages 151-166.
    4. Frances Stewart, 2003. "Income distribution and development," Chapters, in: John Toye (ed.), Trade and Development, chapter 10, Edward Elgar Publishing.
    5. Ranis, Gustav & Stewart, Frances & Ramirez, Alejandro, 2000. "Economic Growth and Human Development," World Development, Elsevier, vol. 28(2), pages 197-219, February.
    6. van der Eng, Pierre, 2009. "Growth and Inequality: The Case of Indonesia, 1960-1997," MPRA Paper 12725, University Library of Munich, Germany.
    7. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    8. Papanek, Gustav F. & Kyn, Oldrich, 1986. "The effect on income distribution of development, the growth rate and economic strategy," Journal of Development Economics, Elsevier, vol. 23(1), pages 55-65, September.
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    Cited by:

    1. Adella Siti Nursaliyawati & Siskarossa Ika Oktora, 2022. "Simultaneous Relationship between Financial Inclusion, Economic Growth, and Income Inequality in Sulawesi Island, 2011–2019," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 68, pages 132-148, Desember.
    2. Inayati Fitri Nur & Soesatyo Yoyok & Witjaksono Andre Dwijanto, 2020. "The effect of locally-generated revenue, capital expenditure, and investment on economic growth in Lamongan (Indonesia), 2010–2019," Technology audit and production reserves, Socionet;Technology audit and production reserves, vol. 6(4(56)), pages 41-44.

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    More about this item

    Keywords

    economic growth; income inequality; labor absorption; economic welfare.;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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