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Urbanization, educational expansion, and expenditures inequality in Indonesia in 1996, 1999, and 2002:

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  • Akita, Takahiro
  • Miyata, Sachiko

Abstract

"This paper considers urban-rural location and education as the main causes of expenditure inequality and attempts to examine inequality changes associated with urbanization and educational expansion in Indonesia from 1996 to 2002, using Indonesian monthly household consumption expenditure data. It introduces a hierarchical framework of inequality decomposition by population subgroups, which enables researchers to analyze inequality resulting from differences in educational attainment as well as inequality within each educational group, after the effects on inequality of urban–rural differences in the composition of educational attainments are removed. It finds that the urban sector's higher educational group contributes significantly to overall inequality. Inequality within the group increased significantly once Indonesia recovered from the financial crisis of 1998. This, together with educational expansion in urban areas, led to a conspicuous rise in urban inequality. Overall expenditure inequality has increased markedly, due not only to the rise in urban inequality but also a widening urban-rural disparity, accompanied by a population shift from the rural to the urban sector. Since more people will obtain higher education as the economy continues to develop, and more jobs requiring specialized skills become available in urban areas, urban inequality is likely to remain high. In order to mitigate urban inequality and thus overall inequality, the government needs to introduce policies that could reduce inequality among households whose heads have a tertiary education." from Authors' Abstract

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 728.

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Date of creation: 2007
Date of revision:
Handle: RePEc:fpr:ifprid:728

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Keywords: Expenditure inequality; Urbanization; Educational expansion; Theil index; Two-stage nested inequality decomposition analysis; Public investment;

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References

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Cited by:
  1. Takahiro Akita & Sachiko Miyata, 2013. "The Roles of Location and Education in the Distribution of Economic Well-being in Indonesia: Hierarchical and Non-hierarchical Inequality Decomposition Analyses," Working Papers EMS_2013_15, Research Institute, International University of Japan.
  2. Andy Sumner & Peter Edward, 2013. "From Low Income, High Poverty to High-Income, No Poverty? An Optimistic View of the Long-Run Evolution of Poverty in Indonesia By International Poverty Lines, 1984–2030," Working Papers in Economics and Development Studies (WoPEDS) 201310, Department of Economics, Padjadjaran University, revised Jun 2013.

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