REDUCING ECONOMIC INEQUALITY IN INDONESIA:ANALYSIS USING PANEL MODEL

Indonesia is still experiencing development inequality. This inequality has influenced economic and welfare inequality. This study aims to investigate how to reduce economic inequality. The data come from the Indonesia Database for Policy and Economic Research (INDO-DAPOER) of the World Bank in 2017. The unit analysis is province in 2001-2011 period. The analysis methods used are the bivariate and multiple regression with random effects analyses. The response variable is the log total GDP excluding oil and gas at current price. Meanwhile, the explanatory variables are the monthly per capita household education expenditure (million rupiah), monthly per capita household health expenditure (million rupiah), fiscal tranfers (million rupiah), log number of people employed household, percentage of households with electricity, and net enrollment ratio for junior secondary school (in %). The results of analyses show that all explanatory variables statistically have significant positive effects on economic growth in Indonesia