This study investigates the impact of economic growth, the Human Development Index (HDI), poverty rate, provincial minimum wage, and investment on income inequality across 34 provinces in Indonesia. Employing a quantitative approach, the study utilizes panel data from 2015 to 2023, comprising 306 observations. The analysis was conducted using a panel regression with a Random Effect Model (REM), estimated through Panel EGLS (cross-section random effects) to test the hypotheses. The results indicate that, collectively (F-test), the independent variables significantly influence income inequality. Partially (t-test), the poverty rate and investment exhibit a positive and significant effect on income inequality, whereas the provincial minimum wage has a negative and significant effect, suggesting its potential as a tool to reduce inequality. Meanwhile, economic growth and HDI show no statistically significant impact on income inequality.
Fuadi et al. (Sun,) studied this question.
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