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Urban Inequality in Indonesia

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Abstract

According to an inequality decomposition analysis by urban and rural sectors in Indonesia, urban inequality's contribution to overall inequality in per capita household expenditure has been increasing steadily with widening urban inequality and urbanization proceeding following globalization and financial/trade liberalization. According to the Theil T index, the contribution rose from 54% to 63% during the 1996-2002 period. Urban inequality is expected to play a more important role in overall inequality. This paper explores the determinants of urban inequality in Indonesia using monthly household consumption expenditure data for 1999, 2002, and 2005 from the National Socio-Economic Survey (Susenas). It focuses on educational differences as the major determinant, since according to previous studies in Asian countries they account for around 20-40% of overall inequality.

Suggested Citation

  • Takahiro Akita & Alit Pirmansah, 2011. "Urban Inequality in Indonesia," Working Papers EMS_2011_04, Research Institute, International University of Japan.
    • Handle: RePEc:iuj:wpaper:ems_2011_04
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    File URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2011_04.pdf
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    1. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    2. Jed Friedman & James Levinsohn, 2002. "The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology," The World Bank Economic Review, World Bank, vol. 16(3), pages 397-423, December.
    3. Takahiro AKITA & Rizal Affandi LUKMAN & Yukino YAMADA, 1999. "Inequality In The Distribution Of Household Expenditures In Indonesia: A Theil Decomposition Analysis," The Developing Economies, Institute of Developing Economies, vol. 37(2), pages 197-221, June.
    4. Abuzar Asra, 2000. "Poverty And Inequality In Indonesia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 5(1-2), pages 91-111.
    5. Cameron, Lisa A., 2000. "Poverty and inequality in Java: examining the impact of the changing age, educational and industrial structure," Journal of Development Economics, Elsevier, vol. 62(1), pages 149-180, June.
    6. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    7. repec:ilo:ilowps:213223 is not listed on IDEAS
    8. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
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    Cited by:

    1. Perdamen Sagala & Takahiro Akita & Arief Yusuf, 2014. "Urbanization and expenditure inequality in Indonesia: testing the Kuznets hypothesis with provincial panel data," Letters in Spatial and Resource Sciences, Springer, vol. 7(3), pages 133-147, October.
    2. Mitsuhiro Hayashi & Mitsuhiko Kataoka & Takahiro Akita, 2014. "Expenditure Inequality in Indonesia, 2008–2010: A Spatial Decomposition Analysis and the Role of Education," Asian Economic Journal, East Asian Economic Association, vol. 28(4), pages 389-411, December.
    3. Takahiro Akita & Heryanah, 2013. "Educational Expansion and Inequality in Indonesia: Testing the Kuznets Hypothesis with Provincial Panel Data," Working Papers EMS_2013_18, Research Institute, International University of Japan.
    4. Mitsuhiro Hayashi & Mitsuhiko Kataoka & Takahiro Akita, 2012. "Spatial Dimensions of Expenditure Inequality and the Role of Education in Indonesia: An Analysis of the 2008-2010 Susenas Panel," Working Papers EMS_2012_21, Research Institute, International University of Japan.
    5. Asep Suryahadi & Ridho Al Izzati & Daniel Suryadarma & Teguh Dartanto, 2023. "How Inequality Affects Trust in Institutions: Evidence from Indonesia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 18(1), pages 73-91, January.
    6. Wasim, Summerina & Munir, Kashif, 2017. "Regional Disparity and Decentralization in Pakistan: A Decomposition Analysis," MPRA Paper 83444, University Library of Munich, Germany.
    7. Suryani, Ani Wilujeng & Helliar, Christine & Carter, Amanda J. & Medlin, John, 2018. "Shunning careers in public accounting firms: The case of Indonesia," The British Accounting Review, Elsevier, vol. 50(5), pages 463-480.

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    More about this item

    Keywords

    Urban Inequality; Urbanization; Education; Theil Decomposition Analysis; Indonesia;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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