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Expenditure Inequality in I ndonesia, 2008–2010: A Spatial Decomposition Analysis and the Role of Education
Author(s) -
Hayashi Mitsuhiro,
Kataoka Mitsuhiko,
Akita Takahiro
Publication year - 2014
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/asej.12042
Subject(s) - inequality , theil index , economics , income inequality metrics , index (typography) , per capita , rural area , panel data , economic inequality , demographic economics , econometrics , mathematics , sociology , political science , demography , population , mathematical analysis , world wide web , computer science , law
Based on the 2008–2010 S usenas panel data, this study examines expenditure inequality from spatial perspectives in I ndonesia, using three decomposition methods: (i) a conventional Theil index decomposition; (ii) an alternative T heil index decomposition proposed by E lbers et al . (2008); and (iii) the B linder− O axaca decomposition. Our results show that overall inequality in per capita expenditure increases between 2008 and 2010, which coincides with a rising trend in the official G ini coefficient. The contribution of inequality within urban and rural areas to total inequality is larger than that of inequality between urban and rural areas. Looking within urban and rural areas, urban inequality is significantly higher than rural inequality. J ava‐ B ali in particular records very high urban inequality. Overall, urban inequality increases, urban–rural inequality remains stable, rural inequality decreases, and inequality at the national level increases. Although urban–rural inequality has a relatively low share in overall inequality, the share is not small enough to ignore its impact. Furthermore, when using the alternative decomposition method, the contribution of urban–rural inequality increases substantially. The present study also found that educational differences appear to have played an important role in expenditure inequality within urban areas and between urban and rural areas.