Factors That Influence Income Inequality In West Java Province in 2010-2015

Abstract

The challenges of all developing countries such as Indonesia among others are how to increase economic growth, to reduce inequality and to alleviate poverty. Income inequality happens because of either economic or non-economic problems. This study aimed to analyze factors that influence the income inequality in West Java province. There are 7 cities that has been analyzed in this research which are; Bogor, Sukabumi, Bandung, Tasikmalaya, Cirebon, Bekasi and Depok. The data used were panel data started from years 2010 - 2015. This research used income inequality as the dependent variable, and economic growth, human development index, minimum wages, and inflation as the independent variables. The data were analyzed using panel data analysis with Fixed-Effect Model regression. The regression result showed that all independent variables significantly influence the dependent variable. All independent variables can explain income inequality in West Java about 70 %. The study results showed that inflation and human development index significantly influence income inequality in West Java. Economic growth and minimum wage did not significantly income inequality in West Java.