Exploring the Economic and Social Determinants of Income Inequality in Indonesia
DOI:
https://doi.org/10.24269/ekuilibrium.v21i2.2026.pp351-368Keywords:
Inequality, Socio-economic, Autoregressive Distributed Lag, Gini IndexAbstract
This study aims to analyze the dynamic aspects of economic and social factors that influence income inequality in Indonesia. This study applies the Autoregressive Distributed Lag (ARDL) time series model for the period 1996-2024, using the Gini Index as an indicator of inequality and including GDP per capita, literacy rate, unemployment, inflation, and population density as determinants. The result of this study show that the existence of a long rung cointegration relationship among variables as a result of Bound Cointegration Test. The short-term result indicates fluctuations of the dynamics of inequality, income, education, unemployment, inflation, and population density influence inequality in Indonesia. The Error Correction Term (ECT) is negative and statistically significant, indicating a stable adjustment from short-run disequilibrium toward long-run equilibrium. Meanwhile, long-term conditions show consistent results, but the inflation variable has no effect on inequality. The implications of this research indicate that the government needs to implement structured policies to encourage national economic growth and improve the quality of education, while simultaneously reducing unemployment and managing population density in Indonesia.
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