Infrastructure and Inequality: an Empirical Evidence From Indonesia

Amien Makmuri
Journal article Economic Journal of Emerging Markets • 2017 Indonesia

Download full text
(English, 11 pages)

Abstract

This research is an attempt to study the empirical relationship between infrastructure and income inequality in Indonesia. It uses regression analysis with panel data set covering 32 provinces in the period of 2007–2013 in order to estimate whether the infrastructure has positive or negative effects on income inequality. We use a conventional income inequality measure, Gini index. The model is estimated by simple pooled OLS, fixed-effect and random-effect models. To overcome the endogeneity problem, infrastructures quantity and quality indicators enter the regressions with one-year lag. We find that road and telecommunication quantities tend to boost income inequality, while electricity quantity, airport quantity, and airport quality have a favorable impact on the distribution of income and help to alleviate income inequality. Whereas, when these different categories of infrastructure are formed as synthetic indices, the relation between these indices and income inequality lends support to the idea that infrastructure increases income inequality.

Metrics

  • 323 views
  • 150 downloads

Journal

Economic Journal of Emerging Markets

Economic Journal of Emerging Markets (EJEM) is an open access, peer-reviewed economic journal tha... see more