ANALYSIS OF INEQUALITY ON THE SUMATRA ISLAND, INDONESIA

Abstract: This study aims to analyze and empirically prove the effect of economic growth, fiscal decentralization, trade, and the basic sector on inequality in Sumatra Island, Indonesia. The data used is panel data with 154 regencies/cities on the Sumatra Island for ten years (2011-2020), and the data processing technique used is the econometric model of multiple linear equations (multiple regression) for panel data. The results of the study found that the variables of economic growth and fiscal decentralization were negatively and significantly correlated with inequality on the Sumatra Island. Meanwhile, the trade variable is positively and significantly correlated with inequality. There are the base sector dummy variable shows a significant effect on inequality. This study has limitations, that is using only four independent variables (economic growth, fiscal decentralization, trade, and the basic sector) so that there are other factors or variables outside the model that can also affect the dependent variable (inequality). The contribution given from this research is as input as well as evaluation for interested parties in making policies so that they can produce more targeted policies in an effort to reduce inequality, especially for regional governments on the Sumatra Island