The Impact of Income Inequality, Human Development, Gender Development and Open Unemployment on Economic Growth in Indonesia

Abstract

Good economic growth reflects equitable income distribution and high labour absorption, leading to job creation. Addressing economic development is a government priority in Indonesia to tackle poverty, inequality, income disparity, and unemployment. This study investigates the impacts of income inequality, human development, gender development, and open unemployment on economic growth in Indonesia using panel data regression from 34 provinces (2015-2022). Data on income inequality, the human development index, the gender development index, and the open unemployment rate are from the Central Bureau of Statistics Indonesia, while economic growth data are from the SIMREG Bappenas. The results indicate that the fixed effects model is optimal. Income inequality, the human development index, and the open unemployment rate negatively and significantly affect economic growth, while the gender development index has a positive and significant effect. This study proposes that the Indonesian government should consider implementing measures to reduce income inequality through taxation policies and enhance education, healthcare, and infrastructure in remote areas.