Do Poverty and Economic Growth Matter for Income Inequality Reduction in Yogyakarta Province?

Abstract

It has been observed that income inequality is an economic element that may impede a nation's economic development. In general, Indonesia's Gini ratio has remained low for nearly a decade, although one region, Yogyakarta Province, unexpectedly exceeds the national average. The provincial government of Yogyakarta must focus more on reducing income inequality. Therefore, this study employs the Poverty-Growth-Inequality Triangle model approach to investigate the complexity of income inequality in Yogyakarta Province. The data is collected from five cities in Yogyakarta Province from 2010 to 2021. For the quantitative study, a Simultaneous Equation Model analysis with three iterations of least squares is performed. The results indicate that there is no causal relationship between income inequality and economic growth or poverty. According to the model of income inequality, education and the district minimum wage have a significant impact on income inequality. Therefore, local governments are advocated to evaluate policies aimed at reducing income inequality through education system reform, equity in district minimum wage and economic growth, and efficiency in the utilization of income inequality-related funds.

Dari Keberagaman Entitas Menjadi Ketimpangan Multisektor di Indonesia

“…Indikator tingkat tabungan yang dimiliki masyarakat memiliki nilai yang positif, artinya hal tersebut ada hubungannya antara ketimpangan pendapatan masyarakat dengan pertumbuhan ekonomi. Maurilla, Suriani, & Nasir (2022) menemukan bahwa adanya ketimpangan pendapatan sebagai salah satu faktor penghambat pembangunan dan perkembangan ekonomi disuatu negara. Rasio Gini atau Koefisien Gini ditetapkan sebagai indikator pengukuran kesenjangan pendapatan secara umum berlaku diseluruh dunia.…”

“…Ketimpangan Penulis 1 Ketimpangan sosial (Attamimi, Kinseng, & Agusta, 2018); (Camarero & Olivia, 2019); (Elenbaas, Rizzo, & Killen, 2022); (Hernovianty, Pratiwi, & Adventia, 2021). 2 Ketimpangan ekonomi (Hill, 2021); (Itskovich & Factor, 2023); (Maurilla, Suriani, & Nasir, 2022); (Mdingi & Ho, 2021); (Sulistyaningrum & Tjahjadi, 2022). 3 Ketimpangan budaya (Ali & Byrne, 2023); (Saifuddin, 2017); (Supraptiningsih, Jubba, Hariyanto, & Rahmawati, 2023); (Nurman, Yusriadi, & Hamim, 2022).…”

Impact Analysis of Economic Factors, Education, and Access to Resources on Income Gap in Yogyakarta

“…Income inequality is a significant issue in Yogyakarta Province, Indonesia, despite its cultural heritage and economic potential. The provincial government of Yogyakarta needs to focus on reducing income inequality [1]. The study suggests that education and the district minimum wage have a significant impact on income inequality in the region [2].…”

“…Several studies provide insights into this issue. According to [1], education and district minimum wage have a significant impact on income inequality in Yogyakarta Province. [6] found that factors such as household consumption, exports, foreign investment, and per capita income have a positive effect on inclusive economic growth, which can help reduce income inequality.…”