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Fiscal Decentralization, Regional Income Inequality, and the Provision of Local Public Goods: Evidence from Indonesia

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  • Matondang Elsa Siburian

    (Graduate School of Economics, Waseda University)

Abstract

The objective of this paper is to clarify the potential joint determination between fiscal decentralization, regional inequality, and the provision of local public goods in Indonesia. Using provincial-level data over the period 2001-2014, we estimate the simultaneous equation model (SEM) to circumvent the possibility of interdependence between the interest variables. The result reveals that fiscal decentralization is associated with lower regional income disparity but not vice versa. The result confirms that regional income inequality and the provision of public goods are simultaneously determined. The result provides no evidence of interdependence between fiscal decentralization and the provision of local public goods.

Suggested Citation

  • Matondang Elsa Siburian, 2020. "Fiscal Decentralization, Regional Income Inequality, and the Provision of Local Public Goods: Evidence from Indonesia," Working Papers 2001, Waseda University, Faculty of Political Science and Economics.
    • Handle: RePEc:wap:wpaper:2001
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    More about this item

    Keywords

    fiscal decentralization; regional inequality; local public goods; Indonesia; simultaneous equation model;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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