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October 7, 2025Optimum Jurnal Ekonomi dan Pembangunan3 citationsOpen Access

Regional income disparities in Indonesia: Insights from the Williamson index and panel data analysis

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LRLinda Nur RachmawatiFLFirsty Ramadhona Amalia LubisNANurul Azizah Azzakiyyah

Key Points

  • Income distribution inequality in Indonesia is significantly influenced by GRDP per capita and investment.
  • The study finds that GRDP per capita has a positive impact on income inequality, while HDI negatively affects it.
  • Open Unemployment Rate shows no significant effect on income distribution inequality in this analysis.
  • Utilizing panel data from 2018 to 2022, the Fixed Effect Model provided the most accurate results for income disparity.

Abstract

Indonesia records the highest income disparity in Southeast Asia and ranks sixth globally in terms of income inequality, as evidenced by its position in recent international analyses and inequality reports. This study aims to examine the effects of Gross Regional Domestic Product (GRDP) per capita, Human Development Index (HDI), Open Unemployment Rate (OUR), and investment on income distribution inequality, measured using the Williamson Index in Indonesia. The research utilizes panel data spanning from 2018 to 2022 across 34 provinces. A multiple linear regression analysis with panel data methodology was employed, selecting the Fixed Effect Model (FEM) as the most suitable estimator.​ The findings reveal that, collectively, all independent variables in the model significantly influence income distribution inequality. Individually, GRDP per capita has a positive and significant effect on income inequality, HDI exhibits a negative and significant impact, OUR shows no significant effect, while investment negatively and significantly affects income distribution inequality. ​This study contributes by providing input to stakeholders in formulating policies that can be implemented to address income distribution inequality, particularly in the Indonesia.

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Cite This Study

Rachmawati et al. (2025) studied this question.

synapsesocial.com/papers/68e5a0557f330f793683f2d5https://doi.org/10.12928/optimum.v15i2.12953
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1The Influence of Gross Regional Domestic Product Per Capita and Foreign Direct Investment on Income Inequality: An Empirical Study of 34 Provinces in Indonesia2024 · 2 citations
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  3. 3Income inequality across provinces in Indonesia: An empirical analysis of human development, economic performance, and labor market conditions2025 · 2 citations
  4. 4The role of gender empowerment on income inequality in Indonesia: Evidence from panel data2025
  5. 5Analysis of Factors Affecting Income Disparity in Indonesia2025