This book addresses three main issues in regional income inequality and development: meaning of regional inequality, measurement of regional inequality and the relationship between national economic development and regional income inequality. It provides analytical methods useful in exploring the determinants of regional inequality in income and productivity. Some software commands in Stata (statistical software package) available for the measurement and analysis of income inequality are also introduced. Some researchers have argued that spatial concentration of population in and around major cities and the concurrent increase in regional inequality do not hinder national economic development, and may stimulate it. Nevertheless, many national governments seek to promote balanced regional economic development and reduce regional income inequality, because unbalanced development and higher levels of regional inequality may cause political or ethnic conflicts between different regions of the country. As the applications of the analytical methods introduced in the first part of the book, the second part presents four independent empirical studies on regional inequality and development in Indonesia. They offer very interesting case studies for the formulation of policies and programs to reduce regional inequalities, because as the world’s largest archipelagic country with more than 13 thousand islands and 300 ethnic groups, Indonesia is spatially diverse in terms of its ecology, natural resource endowments, economy, ethnicity and culture.This book can be used as a textbook for undergraduate and graduate students who are interested in national economic development and regional income inequality. It is also beneficial for practitioners and policy makers who are in charge of the formulation, implementation and evaluation of development policies and programs.
Author(s): Takahiro Akita, Mitsuhiko Kataoka
Series: New Frontiers in Regional Science: Asian Perspectives, 63
Publisher: Springer
Year: 2022
Language: English
Pages: 207
City: Singapore
Acknowledgments
Contents
Chapter 1: Introduction
1 Preliminaries
2 Contents of the Book
References
Part I: Measurement and Analysis of Regional Inequality
Chapter 2: Measurement of Regional Inequality
1 Introduction
2 Measures of Interpersonal Inequality
2.1 Standard Deviation
2.2 Coefficient of Variation
2.2.1 Principle 1: Income Homogeneity or Mean Independence
2.2.2 Principle 2: Anonymity Principle
2.2.3 Principle 3: Population Homogeneity or Population Independence
2.2.4 Principle 4: Pigou-Dalton Principle of Transfers or Transfer Principle
2.3 Formal Definition of Measures of Inequality
2.4 Lorenz Curve
2.5 Gini Coefficient
2.6 Generalized Entropy Class of Measures and Theil Indices
2.7 Other Relative Inequality Measures
3 Decomposable Inequality Measures
3.1 Inequality Decomposition by Population Subgroups
3.2 Inequality Decomposition by Income Sources or Factor Components
4 Urbanization and Kuznets Process
5 Measures of Regional Inequality
5.1 Contribution of Between-region Inequality to Overall Interpersonal Income Inequality (Type 1 Measure)
5.2 Population-Weighted Coefficient of Variation (Type 2 Measure)
5.3 Population-Unweighted Coefficient of Variation (Type 3 Measure)
5.4 Theil Indices as Measures of Regional Inequality
6 Regional Convergence
7 Some Useful Stata Commands
Appendix 1: Geometric Definition of the Gini Coefficient (Eq. 2.3)
Appendix 2: Some Properties of the Natural Logarithm Function
Appendix 3: Relationship Between E2 and CV2 (Eq. 2.10)
Appendix 4: Other Relative Inequality Measures
Appendix 5: Inequality Decomposition by Population Subgroups
Appendix 6: Decomposition by Population Subgroups: Generalized Entropy Class of Measures
Appendix 7: Inequality Decomposition by Income Sources
Appendix 8: Kuznets Process of Urbanization (Eqs. 2.23 and 2.26)
Appendix 9: Neoclassical Growth Model (Solow Growth Model)
References
Chapter 3: Analysis of Regional Inequality
1 Introduction
2 Bidimensional Inequality Decomposition Analysis
2.1 Decomposition of the Squared Coefficient of Variation by Regions
2.2 Decomposition of the Squared Coefficient of Variation by GDP Components
2.3 Bidimensional Inequality Decomposition Equation based on the Coefficient of Variation
2.4 Bi-dimensional Inequality Decomposition Equation based on the Population-weighted Coefficient of Variation
3 Sectoral Inequality Decomposition Analysis
4 Two-stage Nested Theil Decomposition Analysis
5 Factor Decomposition Analysis of Regional Income Inequality
Appendix 1: Decomposition of the Squared Coefficient of Variation by Regions (Eq. 3.2)
Appendix 2: Decomposition of the Squared Coefficient of Variation by GDP Components (Eqs. 3.9 and 3.10)
Appendix 3: Bidimensional Inequality Decomposition Equation based on the Squared Coefficient of Variation (Eq. 3.13)
Appendix 4: Bidimensional Inequality Decomposition Equation based on the Population-weighted Coefficient of Variation (Eq. 3.1...
Appendix 5: Sectoral Inequality Decomposition Equation (Eqs. 3.22 and 3.25)
Appendix 6: Decomposition of Theil T by Region (Eqs. 3.29, 3.30, and 3.31)
References
Part II: Analysis of Regional Inequality: Applications
Chapter 4: Economic Tertialization, Output Deindustrialization, and Income Inequality in Indonesia: A Bidimensional Inequality...
1 Introduction
2 Literature Review
3 Data and Method
3.1 Data
3.2 Bidimensional Inequality Decomposition Method
4 Empirical Results
4.1 Level and Trend of Inequality in Per Capita GDP
4.2 Regional Convergence in Per Capita GDP
4.3 Inequalities in Per Capita GDP by Industrial Sectors
4.4 Bidimensional Decomposition Analysis
5 Conclusion
References
Chapter 5: Structural Changes and Regional Income Inequality in the Indonesian Manufacturing Industry: An Inequality Decomposi...
1 Introduction
2 Data and Methods
2.1 Data
2.2 Methods
2.2.1 Shift and Share Analysis
2.2.2 Inequality Decomposition by Factor Components: Coefficient of Variation (CV)
2.2.3 Inequality Decomposition by Factor Components: Gini Coefficient
3 Results
3.1 Provincial Growth in Manufacturing GDP Between 2010 and 2019: A Shift and Share Analysis
3.2 Levels and Trends of Inter-provincial Inequalities in GDP Between 2010 and 2019
3.3 Identifying Inequality-Reducing and Inequality-Raising Manufacturing Subsectors: An Inequality Decomposition Analysis by t...
3.4 Determinants of Inter-provincial Inequality in Manufacturing GDP
4 Concluding Remarks
References
Chapter 6: The Impact of the 1997 Economic Crisis on Income Inequality in Indonesia: A Two-Stage Nested Theil Decomposition An...
1 Introduction
2 Data and Methods
2.1 Data
2.2 Methods
2.2.1 Two-Stage Nested Theil Decomposition Method
2.2.2 Shift and Share Analysis
3 Results
3.1 Income Inequality before the Economic Crisis
3.1.1 Between-Region and Between-Province Inequalities
3.1.2 Within-Province Inequalities
3.2 The Impact of the Economic Crisis on Income Inequality
3.2.1 Between-Region and Between-Province Inequalities
3.2.2 Within-Province Inequalities
4 Concluding Remarks
References
Chapter 7: Inter-provincial Inequality in Labor Productivity and Efficiency in Indonesia: A Factor Decomposition Analysis
1 Introduction
2 Data and Methods
2.1 Data
2.2 Methods
2.2.1 DEA-based Frontier Analysis
2.2.2 Theil´s Second Measure-based Factor Decomposition Analysis
3 Results
3.1 Measuring Conventional and Bias-corrected Relative Efficiency by Province
3.2 Exploring the Sources of Inter-provincial Inequality in Labor Productivity
4 Concluding Remarks
Appendix
References
