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Decentralization Policy and Equality: A Theil Analysis of Indonesian Income Inequality

Author

Listed:
  • Djoni Hartono

    (Department of Economics, University of Indonesia)

  • Tony Irawan

    (Department of Economics,Faculty of Economics and Management; Bogor Agricultural University)

Abstract

The decentralization policy has been implemented for almost 8 years in Indonesia. One of the main purposes of decentralization policy was to increase economic growth followed by equality. In this paper, we construct gini coefficient and Theil indices of sector income distribution to evaluate the trend of Indonesian income inequality during the implementation of the policy. We will analyze the equality between sector and within sector (e.q. agriculture, industry and services) both in the country and province level data. The output of this study is expected could answer the question whether there is a growth with equality during the implementation of decentralization both between and within sector.

Suggested Citation

  • Djoni Hartono & Tony Irawan, 2008. "Decentralization Policy and Equality: A Theil Analysis of Indonesian Income Inequality," Working Papers in Economics and Development Studies (WoPEDS) 200810, Department of Economics, Padjadjaran University, revised Oct 2008.
    • Handle: RePEc:unp:wpaper:200810
    as

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    File URL: http://ceds.feb.unpad.ac.id/wopeds/200810.pdf
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    References listed on IDEAS

    as
    1. Neyapti, Bilin, 2006. "Revenue decentralization and income distribution," Economics Letters, Elsevier, vol. 92(3), pages 409-416, September.
    2. 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.
    3. Ebel, Robert D. & Yilmaz, Serdar, 2002. "On the measurement and impact of fiscal decentralization," Policy Research Working Paper Series 2809, The World Bank.
    4. Akai, Nobuo & Sakata, Masayo, 2002. "Fiscal decentralization contributes to economic growth: evidence from state-level cross-section data for the United States," Journal of Urban Economics, Elsevier, vol. 52(1), pages 93-108, July.
    5. Tomson Ogwang, 1995. "The Economic Development-Income Inequality Nexus," American Journal of Economics and Sociology, Wiley Blackwell, vol. 54(2), pages 217-229, April.
    6. Fauziah Swasono, 2007. "Fiscal Decentralization and Economic Growth : Evidence from Indonesia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 55, pages 109-134, August.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Iván González Gordón & Budy P. Resosudarmo, 2019. "A sectoral growth‐income inequality nexus in Indonesia," Regional Science Policy & Practice, Wiley Blackwell, vol. 11(1), pages 123-139, March.
    2. Earth Innovation Institute, 2015. "Central Kalimantan Land Governance Assessment," World Bank Publications - Reports 28514, The World Bank Group.
    3. Mitsuhiko Kataoka & Kodrat Wibowo, 2014. "Decentralization and Spatial Allocation Policy of Public Investment in Indonesia and Japan," Working Papers in Economics and Development Studies (WoPEDS) 201403, Department of Economics, Padjadjaran University, revised Feb 2014.
    4. M A B Siddique & Heru Wibowo & Yanrui Wu, 2014. "Fiscal Decentralisation and Inequality in Indonesia: 1999-2008," Economics Discussion / Working Papers 14-22, The University of Western Australia, Department of Economics.

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    More about this item

    Keywords

    Decentralization; Inequality; Theil indices;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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