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The development of inequality and poverty in Indonesia, 1932-1999

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  • Bas van Leeuwen
  • Peter Foldvari

Abstract

In this paper we estimate inequality in Indonesia between 1932 and 1999. There was an increase in inequality at the start of this period but then a sharp decline from the 1960s. A shift from domestic to export agriculture over the period up to the Great Depression accounts for the increase in inequality. During the 1930s, as the price of export crops declined, the income of rich farmers suffered a blow. Yet, this was counterbalanced by increasing gap between expenditure in the urban and rural sectors, causing an over-all rise in inequality. As for the second half of the century, we find that the employment shift towards manufacturing and services, combined with an increase in labour productivity in agriculture, accounts for the decline in inequality. These inequality trends had an effect on poverty as well, but prior to the 1940s the negative impact of the rise in inequality was offset by an increase in per capita GDP. Between 1950 and 1980 a decline in inequality, combined with increased per capita GDP rapidly raised a large portion of the population above the poverty line.

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Bibliographic Info

Paper provided by Utrecht University, Centre for Global Economic History in its series Working Papers with number 0026.

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Length: 27 pages
Date of creation: Jan 2012
Date of revision:
Handle: RePEc:ucg:wpaper:0026

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Postal: University of Utrecht, Drift 10, The Netherlands
Web page: http://www.cgeh.nl
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Related research

Keywords: Indonesia; inequality; poverty; economic development;

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References

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Cited by:
  1. 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.
  2. Jan Luiten van Zanden & Joerg Baten & Peter Foldvari & Bas van Leeuwen, 2011. "The Changing Shape of Global Inequality - exploring a new dataset," Working Papers, Utrecht University, Centre for Global Economic History 0001, Utrecht University, Centre for Global Economic History.

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