Income inequality in Indonesia and its influencing factors

Abstract

This study aims to discuss and analyze the effect of economic growth, HDI, UMP, and poverty on both partial and general income inequality, as well as to discuss the policies that have been implemented throughout the economic development process. This study uses secondary data published by the Central Bureau of Statistics (BPS) in the form of panel data consisting of cross-section and time series data from 34 provinces in Indonesia from 2015 to 2022. In this study, multiple linear regression tests were used, processed with statistical tools, namely EViews10 software. The findings in this study are: (1) Economic growth has a negative and significant effect on income inequality in Indonesia; (2) The Human Development Index has a negative and significant effect on income inequality in Indonesia; (3) The provincial minimum wage has a negative and insignificant effect on income inequality in Indonesia; (4) Poverty has a positive and significant effect on income inequality in Indonesia; (5) Policies that have been implemented to reduce income inequality include education policy, fiscal (economic) policy, social policy, and infrastructure development policy.