IDEAS home Printed from
   My bibliography  Save this paper

The Impact of Budget Retrenchment on Income Distribution in Indonesia (including Statistical Annex): A Social Accounting Matrix Application


  • Steven Keuning

    (Institute of Social Studies)

  • Erik Thorbecke

    (Cornell University)


This document sets out a new method for assessing the implications of public expenditure cuts for income distribution. The instrument is a social accounting matrix providing the appropriate conceptual framework for estimating all the direct and indirect effects of changes in any given category of public expenditure (e.g. agricultural investment or education spending). By using this matrix it is possible to calculate the upstream effects of an adjustment measure on income distribution. It shows, for instance, that a decline in agricultural investment reduces employment and wages in the building sector. Similarly, a fall in education spending depresses the incomes of the skilled dependent labour force. The downstream effects have also been estimated: in the case of education this means cutbacks in free services to families and so a fall in their incomes.This method has been applied to Indonesia in 1984-88 by comparing the observed effects of lower public spending due to structural ... L'impact d'une réduction des dépenses budgétaires sur la distribution des revenus en Indonésie : Utilisation d'une matrice de comptabilité sociales Ce document présente une nouvelle méthode pour évaluer l'incidence des réductions de dépenses publiques sur la distribution des revenus. L'instrument choisi est une matrice de compatibilité sociale qui fournit le cadre conceptuel approprié pour estimer l'ensemble des effets directs et indirects de la variation d'une catégorie de dépenses publiques (par exemple les investissements dans l'agriculture ou les dépenses d'éducation). Grâce à cette matrice, on peut calculer les effets en amont d'une mesure d'ajustement sur la distribution des revenus; on observe ainsi que la baisse des investissements dans l'agriculture entraîne une réduction de l'emploi et des salaires dans le secteur du bâtiment, de même que la baisse des dépenses d'éducation conduit à celle des revenus des salariés qualifiés. D'autre part, on estime les effets en aval : pour l'éducation cela se traduit par une diminution des services fournis gratuitement aux familles et donc une diminution de leur ...

Suggested Citation

  • Steven Keuning & Erik Thorbecke, 1989. "The Impact of Budget Retrenchment on Income Distribution in Indonesia (including Statistical Annex): A Social Accounting Matrix Application," OECD Development Centre Working Papers 3, OECD Publishing.
  • Handle: RePEc:oec:devaaa:3-en

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Jorge Martínez-Vázquez & Violeta Vulovic & Blanca Moreno Dodson, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," Hacienda Pública Española, IEF, vol. 200(1), pages 95-130, March.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oec:devaaa:3-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.