CONVERGENCE OF INCOME AMONG PROVINCES IN INDONESIA,1984-2008: A PANEL DATA APPROACH

https://doi.org/10.22146/jieb.6221

Bayu Kharisma(1*), Samsubar Saleh(2)

(1) University of Padjadjaran, Bandung
(2) University of Gadjah Mada
(*) Corresponding Author

Abstract


This paper aims to analyze the income dispersion and test both absolute convergence and conditional convergence of income among 26 provinces in Indonesia during 1984- 2008 using static and dynamic panel data approach. Using the σ convergence analysis indicated that income dispersion measured by coefficient variation occurred in 1984-2008 generally experienced fluctuation. Factors influencing income dispersion rate were the impact of the economic crisis, the period of fiscal decentralization in Indonesia, the impact of the Bali bombing, impact of rising fuel prices in October 2005 and the earthquake in Jogjakarta and Central Java. Dynamic panel data estimation with system GMM produced an efficient and consistent estimator to overcome the problems of instrument validity. In addition, it is also dedicated to minimize the risk of bias due to endogeneity problem. There was a strong indication of the existence of absolute convergence and conditional convergence among 26 provinces in Indonesia during 1984-2008. Thus, there was evidence that the economy of poorer provinces tends to grow faster compared to the more prosperous provinces, and this progress meant that there was a tendency to catch up. Based on the system GMM estimation, it is found that the provinces in Java havefaster speed of convergence comparatively to those outside Java.


Keywords


Income dispersion, absolute convergence, conditional convergence, system GMM

Full Text:

PDF PDF



DOI: https://doi.org/10.22146/jieb.6221

Article Metrics

Abstract views : 2350 | views : 1291 | views : 3116

Refbacks

  • There are currently no refbacks.




Copyright (c) 2013 Journal of Indonesian Economy and Business

License URL: http://creativecommons.org/licenses/by-sa

Journal of Indonesian Economy and Business

Journal

Editorial Team
Focus and Scope
Peer Review Process
Publication Ethics
Screening for Plagiarism

Authors

Author Guidelines
Submission Guidelines
Online Submissions
Copyright Notice
Privacy Statement
Author Fees

Download

Author Pack
Submission Form & Manuscript Template

 

Reviewer

Reviewer Guidelines
Reviewer Acknowledgement

 

Reader

General Search
Achieves
Author index
Title index

 

 

The Journal of Indonesian Economy and Business (print ISSN 2085-8272; online ISSN 2338-5847) is published by the Faculty of Economics and Business Universitas Gadjah Mada, Indonesia. The content of this website is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License

© 2019 Journal of Indonesian Economy and Business 
 Visitor Statistics