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Vol 41 No 1 (2026): January

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Submitted
Apr 4, 2024
Accepted
Mar 18, 2025
Published
Jan 28, 2026
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Analyzing the Link between Population Diversity, Population Growth, and Income: A Panel Data Study

https://doi.org/10.22146/jieb.v41i1.12790
Irfan Aziz Al Firdaus
irfanazizalfirdaus@mail.ugm.ac.id
Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada
https://orcid.org/0009-0003-8910-9079
Cokorda Bagus Ghana Indra Pradana
Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada
https://orcid.org/0009-0005-6799-1149
Catur Sugiyanto
Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada
https://orcid.org/0000-0001-6170-7569

Corresponding Author(s) : Irfan Aziz Al Firdaus

irfanazizalfirdaus@mail.ugm.ac.id

Journal of Indonesian Economy and Business, Vol 41 No 1 (2026): January

Abstract

Introductions: Amidst shifting demographics across many countries, certain stylized facts related to fertility, population, and income have become less universally applicable as previously established empirical models of fertility were based on long-standing regularities—namely, the negative relationships between income and fertility as well as between women’s labor force participation and fertility—many of which are now being reconsidered in light of evolving demographic trends. Novelty: This research addresses a significant gap in the literature by providing a comprehensive analysis of the relationship between population diversity, population growth, and income growth, incorporating both time-varying and cross-country components. While existing studies have examined these factors individually, our study integrates them to offer a more complete understanding of their interactions. Methodology: We employ the system generalized method of moments (GMM), a dynamic panel estimation technique that helps address endogeneity and unobserved heterogeneity in panel data settings. Findings: Our findings reveal a positive correlation between population diversity and population growth, suggesting that diversity and migration contribute to population expansion through strategic interactions among ethnic groups competing for influence in society, fostering pro-birth policies. However, we also find a negative association between population diversity and income growth, indicating potential ethnic conflict and rent-seeking behavior. In highly diverse societies, rent-seeking can lead to underinvestment in public goods, while frequent ethnic conflict is linked to lower economic growth. Conclusion: This paper highlights the complex relationship between diversity, demographic trends, and economic outcomes, underscoring the need for further research on mitigating the adverse effects of diversity on income growth.

Keywords

Ethnic diversity income population growth system GMM
Firdaus, I. A. A., Pradana, C. B. G. I., & Sugiyanto, C. (2026). Analyzing the Link between Population Diversity, Population Growth, and Income: A Panel Data Study. Journal of Indonesian Economy and Business, 41(1), 74 -. https://doi.org/10.22146/jieb.v41i1.12790
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Author Biographies

Irfan Aziz Al Firdaus, Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada

Irfan Aziz Al Firdaus is an economist and fixed income analyst who earned his bachelor’s degree in economics from the Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM). He has professional experience in macroeconomic and fixed income research at the Research and Development for Societal Impact (RDSI) FEB UGM, in collaboration with PT Bank Central Asia Tbk. (BBCA), where he conducted bond market analysis, monetary policy assessment, and forecasting. His research interests focus on macroeconomics and monetary economics, with active involvement in collaborative research and analytical reporting for policy and financial markets.

Cokorda Bagus Ghana Indra Pradana, Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada

Cokorda Bagus Ghana Indra Pradana is a reseach fellow who earned his bachelor’s degree in economics from the Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM). He has professional experience in financial system stability and payment system at the Bank Indonesia Institute where he prepared various training programs and learning tools for Bank Indonesia’s central banker. His research interests focus on macroeconomics and macroprudential policies.

Catur Sugiyanto, Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada

Catur Sugiyanto is a Professor of Economics at Universitas Gadjah Mada (UGM), where he has taught since 1987. He holds a bachelor’s degree from UGM, a master’s from the University of Alberta, and a Ph.D. from the University of Illinois at Urbana–Champaign. His research specializes in agricultural economics, regional development, and development economics. His work has been published in the International Journal of Ethics and Systems, South East European Journal of Economics and Business, Economies, Journal of Natural Resources and Environmental Management, Journal of Degraded and Mining Lands Management, International Journal of Energy Sector Management, and the Journal of Regional and City Planning.

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