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Structural Changes and Regional Income Inequality in Indonesia: A Bidimensional Decomposition Analysis *
Author(s) -
Akita Takahiro,
Kurniawan Puji Agus,
Miyata Sachiko
Publication year - 2011
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/j.1467-8381.2011.02053.x
Subject(s) - inequality , economics , gross regional product , economic inequality , income distribution , urbanization , distribution (mathematics) , globalization , product (mathematics) , population , gross domestic product , decomposition method (queueing theory) , economic geography , macroeconomics , economic growth , economy , market economy , mathematics , mathematical analysis , geometry , demography , sociology , discrete mathematics
Using the bidimensional decomposition method of a population‐weighted coefficient of variation, this paper analyzes the changes in the determinants of interprovincial income inequality associated with structural changes in Indonesia from 1983 to 2004. The method unifies two inequality decompositions by regional groups and gross regional product components (industrial sectors) and, therefore, enables us to assess the contributions of gross regional product components to within‐region and between‐region inequalities, as well as to overall inequality. As the share of mining has decreased, the spatial distribution of manufacturing has played a more important role in the inequality of Sumatra and Kalimantan, while the primacy of Jakarta, with strong urbanization economies, facilitated by globalization and trade and financial liberalization, has determined much of the Java–Bali region's inequality and, therefore, overall inequality in Indonesia.