Income Inequality in Indonesia: Panel Data of 34 Provinces 2014-2016

Abstract

Income inequality is the difference in the ability of people to have goods or services, and more broadly, it is the problem of community welfare. Income inequality can be measured at regional, national and global level. Income inequality in Indonesia, which representing by Gini index, is still relatively high, even though the number tends to decline. The high level of income inequality is influenced by various factors. This study aims to analyze the influence of economic growth, population and provincial minimum wage toward income inequality in Indonesia. By applying a fixed-effect of panel data regression model of the 34 provinces along 2014-2016, the study finds that economic growth and population do not affect the income inequality, while provincial minimum wage has the negative effect.