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Regional Income Disparities, Distributional Convergence, and Spatial Effects: Evidence from Indonesia

Author

Listed:
  • Gunawan, Anang
  • Mendez, Carlos
  • Santos-Marquez, Felipe

Abstract

Using a novel dataset, this paper studies the spatio-temporal dynamics of income per capita across provinces and districts in Indonesia over the 2000-2017 period. First, an exploratory spatial analysis suggests that spatial autocorrelation is only significant at the district level and it appears to be robust from 2013 to 2017. Thus, at the district level, we proceed to use a spatial filtering model for decomposing income into a spatially independent component and a spatial residual. Next, through the lens of a distributional convergence framework, we find that the non-filtered income is characterized by a lack of regional mobility. In contrast, the spatially independent component shows a pattern of polarization. We conclude arguing that neighbor effects have played a significant role in reducing regional polarization in Indonesia.

Suggested Citation

  • Gunawan, Anang & Mendez, Carlos & Santos-Marquez, Felipe, 2019. "Regional Income Disparities, Distributional Convergence, and Spatial Effects: Evidence from Indonesia," MPRA Paper 97090, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:97090
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    File URL: https://mpra.ub.uni-muenchen.de/97090/1/MPRA_paper_97090.pdf
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    More about this item

    Keywords

    Convergence; Getis filter; Nonparametric distribution; Indonesia;

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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