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Education expansion, the Kuznetsian tension, and inequality: The case of Indonesia

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  • Yusuf, Arief Anshory
  • Siyaranamual, Martin D.
  • Sumner, Andy

Abstract

This paper explores the impact of education expansion on structural transformation and income inequality in Indonesia, contextualized within the Kuznetsian framework of economic development. Using a natural policy experiment from the 1978–1979 extension of the school year, we apply a regression discontinuity design (RDD) to establish the causal relationship between increased education and labour shifts from agriculture to non-agricultural sectors. Additionally, we employ the recentered influence function (RIF) Oaxaca-Blinder decomposition and the Atkinson inequality decomposition to assess how education expansion contributes to both within-sector and between-sector income inequality. Our findings suggest that while education expansion facilitates structural transformation, it also has complex implications for inequality, particularly within modern sectors.

Suggested Citation

  • Yusuf, Arief Anshory & Siyaranamual, Martin D. & Sumner, Andy, 2026. "Education expansion, the Kuznetsian tension, and inequality: The case of Indonesia," Structural Change and Economic Dynamics, Elsevier, vol. 79(C), pages 80-87.
    • Handle: RePEc:eee:streco:v:79:y:2026:i:c:p:80-87
    DOI: 10.1016/j.strueco.2026.04.009
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    References listed on IDEAS

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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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