Are poor provinces catching-up the rich provinces in Indonesia?

Abstract

This paper examines the dynamics of socio-economic inequalities in Indonesia over the last four decades. We apply a club convergence test to provincial panel data on four socio-economic indicators: per capita gross regional product, the Gini coefficient, the school enrolment rate, and the fertility rate. We find that there is no single equilibrium steady state path for all these indicators in Indonesia. Instead, the data suggest that there exist two groups, with provinces converging within each of these two groups, but not between these groups. Finally, we identify the provinces that are catching-up and those that are falling behind in terms of the various socio-economic indicators.