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Spatial Dimensions of Expenditure Inequality and the Role of Education in Indonesia: An Analysis of the 2008-2010 Susenas Panel

Based on 2008-2010 Susenas panel data, this study analyzes expenditure inequality in Indonesia from spatial perspectives by using several inequality decomposition methods: decomposition of the Theil indices by population subgroups; decomposition of the Gini coefficient by expenditure components; and the Blinder-Oaxaca decomposition. In the Theil decomposition, this study employs not only the conventional approach but also an alternative approach proposed by Elbers and others (2008). Our results show that a substantial portion of expenditure inequality is attributed to inequalities within urban and rural sectors. According to the alternative approach, however, the contribution of between-sector inequality increases conspicuously, suggesting that there are notable differences in the distribution of per capita household expenditures between the urban and rural sectors. Educational differences appear to have played an important role in urban inequality as well as urban-rural disparity. For both urban and rural households, expenditures on non-food items, including expenditure on education, serve to have increased total inequality.

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File URL: http://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2012_21.pdf
File Function: First version, 2012
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Paper provided by Research Institute, International University of Japan in its series Working Papers with number EMS_2012_21.

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Length: 33 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:iuj:wpaper:ems_2012_21
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  1. Takahiro Akita & Puji Agus Kurniawan & Sachiko Miyata, 2009. "Structural Changes and Regional Income Inequality in Indonesia: A Bi-dimensional Decomposition Analysis," Working Papers EMS_2009_13, Research Institute, International University of Japan.
  2. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-56, February.
  3. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-25, April.
  4. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  5. Anthony Shorrocks & Guanghua Wan, 2005. "Spatial decomposition of inequality," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 59-81, January.
  6. Kanbur, Ravi, 2000. "Income distribution and development," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 13, pages 791-841 Elsevier.
  7. Hal Hill & RBudy Resosudarmo & Yogi Vidyattama, 2008. "Indonesia's Changing Economic Geography," Departmental Working Papers 2008-02, The Australian National University, Arndt-Corden Department of Economics.
  8. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
  9. Chris Elbers & Peter Lanjouw & Johan Mistiaen & Berk Özler, 2008. "Reinterpreting between-group inequality," Journal of Economic Inequality, Springer, vol. 6(3), pages 231-245, September.
  10. Jonathan Haughton & Shahidur R. Khandker, 2009. "Handbook on Poverty and Inequality," World Bank Publications, The World Bank, number 11985, March.
  11. B. Raksaka Mahi & Suahasil Nazara, 2012. "Survey of recent developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 48(1), pages 7-31, April.
  12. Takahiro Akita & Alit Pirmansah, 2011. "Urban Inequality in Indonesia," Working Papers EMS_2011_04, Research Institute, International University of Japan.
  13. Pyatt, Graham & Chen, Chau-nan & Fei, John, 1980. "The Distribution of Income by Factor Components," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 451-73, November.
  14. Ben Jann, 2008. "The Blinder–Oaxaca decomposition for linear regression models," Stata Journal, StataCorp LP, vol. 8(4), pages 453-479, December.
  15. Takahiro Akita, 2002. "Regional Income Inequality In Indonesia And The Initial Impact Of The Economic Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(2), pages 201-222.
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