THE INFLUENCE OF INFRASTRUCTURE ON INEQUALITY OF INCOME DISTRIBUTION IN EASTERN INDONESIA

Albani Elha Laraibaphy; Abdul Aziz Ahmad; Suharno Suharno

doi:10.24235/jm.v8i2.8843

THE INFLUENCE OF INFRASTRUCTURE ON INEQUALITY OF INCOME DISTRIBUTION IN EASTERN INDONESIA

Albani Elha Laraibaphy⁽¹⁾, Abdul Aziz Ahmad⁽²⁾, Suharno Suharno^(3*),

(1) Universitas Jenderal Soedirman
(2) Universitas Jenderal Soedirman
(3) Universitas Jenderal Soedirman
(*) Corresponding Author

Abstract

Abstract

This quantitative research was on income inequality and infrastructure in Eastern Indonesia. This study investigates the impact of road, electricity, water, telecommunication, housing, education, and health infrastructure on income inequality from 2012 to 2018. Using panel data from 16 Eastern Indonesia provinces with 96 observations, this study combines cross-sectional data from 16 Eastern Indonesia provinces and six years of time-series data (2012, 2013, 2014, 2015, 2017, 2018). The results from the Fixed Effect Model by Panel Data indicate that (1) Road, electricity, water, housing, education, and health infrastructure were not significantly correlated with income inequality, and (2) Telecommunication infrastructure harmed income inequality. The implication is that in achieving a more just income distribution, the government should reexamine the distribution of infrastructure projects, i.e., road, electricity, water, housing, education, and health, that are being built. This can be done by focusing the projects on less developed areas.

Keywords: Income Inequality; Infrastructure; Eastern Indonesia.

Full Text:

PDF

References

Amadeo, K. (2021, March 29). Why Trickle-Down Economics Works in Theory But Not in Fact. Retrieved March 30, 2021, from The Balance - Make Money Personal: https://www.thebalance.com/trickle-down-economics-theory-effect-does-it-work-3305572

Bajar, F., & Rajeev, M. (2015). "The Impact of Infrastructure Provisioning On Inequality: Evidence From India". Global Labour University working paper No. 35.

Campano, F., & Salvatore, D. (2006). Income Distribution. New York: Oxford University Press.

Coady, D., & Dizioli, A. (2017). "Income Inequality and Education Revisited : Persistence, Endogeneity, and Heterogeneity". IMF Working Papers No. 17/126, 1-22.

Dabla-Norris, E., Kochnar, K., Suphaphiphat, N., Ricka, F., & Tsounta, E. (2015). "Causes and Consequences of Income Inequality: A Global Perspective". International Monetary Fund SDN/15/13, 1-39.

Danquah, M., & Ohemeng, W. (2017). "Unmasking the Factors behind Income Inequalities in Ghana". International Journal of Social Economics, Vol. 44 No. 7, 884-899.

Drennan, M. P. (2015). Income Inequality: Why It Matters and Why Most Economists Didnâ€™t Notice. New Haven: Yale University Press.

Fuente, B. P. (2016). "Economic Growth and Poverty Reduction in a Rapidly Changing World". European Economy Economic Briefs Issue 19, 1-24.

H., P., Rahman, M., & Haouas, I. (2018). Income Inequality in India and China: The Role of Infrastructure Development, Human Capital Formation and Remittance Inflows. USQ Publication.

Maryati, A., Gunawan, D. S., & Suharno, S. (2021). "Inequality Between the Region in the Province of Central Java 2012â€“2016". ICORE, 5(1).

Mendoza, O. M. (2017). "Infrastructure Development, Income Inequality and Urban Sustainibility in the People's Republic of China". ADBI Working Paper 713, 1-27.

Omar, M.A. (2020). Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis. Journal of Economic Structures, 9(1), ISSN 2193-2409, https://doi.org/10.1186/s40008-020-00214-4

Organization for Economic Cooperation and Development. (2019, March 7). Gender Equality and Sustainable Infrastructure. Retrieved March 30, 2021, from OECD.org - OECD: http://www.oecd.org/gov/gender-mainstreaming/gender-equality-and-sustainable-infrastructure-7-march-2019.pdf

Perkins, D. H., Radelet, S., Lindauer, D. L., & Block, S. A. (2013). Economics of Development, Seventh Edition. New York: W. W. Norton & Company.

Rouhani, O.M. (2016). Social welfare analysis of investment public-private partnership approaches for transportation projects. Transportation Research Part A: Policy and Practice, 88, 86-103, ISSN 0965-8564, https://doi.org/10.1016/j.tra.2015.11.003

Suharno, & Sudjarwanto (2019). "The Travel Cost Approach for the Demand Natural Tourism Object of Cipendok Waterfall". IOP Conf. Ser.: Earth Environ. Sci. 250 012047. https://doi.org/10.1088/1755-1315%2F250%2F1%2F012047

Todaro, M. P., & Smith, S. C. (2015). Economic Development, 12th Edition. Boston: Pearson Addison Wesley.

United Nations Development Programme. (2017). Income Inequality Trends in sub-Saharan Africa. New York: UNDP Regional Bureau for Africa.

Wicaksono, E., Amir, H., & Nugroho, A. (2017). "The Sources of Income Inequality in Indonesia: A Regression-Based Inequality Decomposition". ADBI Working Paper Series Paper 667, 1-12.

Wonyra, K.O. (2021). Inequalities of opportunity in the access and use of telecommunication services in Togo. Telecommunications Policy, 45(5), ISSN 0308-5961, https://doi.org/10.1016/j.telpol.2021.102123

DOI: 10.24235/jm.v8i2.8843