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Growth and Inequality: The Case of Indonesia, 1960-1997

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  • van der Eng, Pierre

Abstract

This paper investigates whether the ‘Kuznets hypothesis’, that economic growth from low levels of GDP per capita is initially associated with an increase in income inequality and later followed by a decline in inequality, is supported by evidence for a less-developed country, Indonesia. The paper outlines the relevant features of the process of rapid growth and structural change, in particular industrialisation since the 1960s. It notes the possible consequences of this process for changes in income distribution, and draws on disparate sets of statistical data to trace trends in income inequality in Indonesia. The paper concludes that the evidence for Indonesia suggests an increase in inequality during the 1970s and a subsequent decrease of inequality until 1997. A comparison of the evidence with historical data for the UK and Japan suggests that income inequality in Indonesia was relatively low.

Suggested Citation

  • van der Eng, Pierre, 2009. "Growth and Inequality: The Case of Indonesia, 1960-1997," MPRA Paper 12725, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:12725
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    File URL: https://mpra.ub.uni-muenchen.de/12725/1/MPRA_paper_12725.pdf
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    References listed on IDEAS

    as
    1. Abuzar Asra, 2000. "Poverty And Inequality In Indonesia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 5(1-2), pages 91-111.
    2. Fields, Gary S., 1994. "Data for measuring poverty and inequality changes in the developing countries," Journal of Development Economics, Elsevier, vol. 44(1), pages 87-102, June.
    3. Manning,Chris, 1998. "Indonesian Labour in Transition," Cambridge Books, Cambridge University Press, number 9780521594127.
    4. Lindert, Peter H., 2000. "Three centuries of inequality in Britain and America," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 3, pages 167-216, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Erni Panca Kurniasih, 2017. "Effect of economic growth on income inequality, labor absorption, and welfare," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 9(2), pages 181-188, April.
    2. 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.
    3. Mohammad KHUSAINI & Setyo TRI WAHYUDI & Zamrud SISWA UTAMA, 2018. "Does Trade Openness And Fiscal Policy Affect Inequality And Economic Growth? A Study In Indonesia," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 215-226, July.
    4. Abdul Jabbar Abdullah & Hristos Doucouliagos & Elizabeth Manning, 2015. "Is There A Kuznets' Process In Southeast Asia?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(02), pages 1-22.
    5. Foldvari, Peter & van Leeuwen, Bas & Marks, Daan & Gall, Jozsef, 2013. "Indonesian regional welfare development, 1900–1990: New anthropometric evidence," Economics & Human Biology, Elsevier, vol. 11(1), pages 78-89.

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    More about this item

    Keywords

    income inequality; Kuznets hypothesis; Indonesia; economic development;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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