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AbstractIntroducing an employment variable with five levels of educational attainment per capita and employing inequality decomposition, this study addresses three questions. How does labour force vary by education and provinces? How does labour force utilization vary by education and provinces? What are the potential causes of differences? We find that the no‐primary‐education group is more endowed in less‐developed provinces and allocated most unequally among education groups across provinces, despite past universal primary education policies. The senior‐secondary‐education group with the largest labour share is a growing concern due to the lower employment rate and largest interprovincial inequality.

Chapter 1. Introduction -- Chapter 2.Measurement of Regional Inequality -- Chapter 3.Analysis of Regional Inequality -- Chapter 4.Economic Tertialization, Output Deindustrialization and Income Inequality in Indonesia: A Bi-dimensional Inequality Decomposition Analysis -- Chapter 5.Structural Changes and Regional Income Inequality in the Indonesian Manufacturing Industry: An Inequality Decomposition Analysis -- Chapter 6.The Impact of the 1997 Economic Crisis on Income Inequality in Indonesia: A Two-stage Nested Theil Decomposition Analysis -- Chapter 7. Inter-provincial Inequality in Labor Productivity and Efficiency in Indonesia: A Factor Decomposition Analysis.

This book addresses three main issues in regional income inequality and development: meaning of regional inequality, measurement of regional inequality and the relationship between national economic development and regional income inequality. It provides analytical methods useful in exploring the determinants of regional inequality in income and productivity. Some software commands in Stata (statistical software package) available for the measurement and analysis of income inequality are also introduced. Some researchers have argued that spatial concentration of population in and around major cities and the concurrent increase in regional inequality do not hinder national economic development, and may stimulate it. Nevertheless, many national governments seek to promote balanced regional economic development and reduce regional income inequality, because unbalanced development and higher levels of regional inequality may cause political or ethnic conflicts between different regions of the country. As the applications of the analytical methods introduced in the first part of the book, the second part presents four independent empirical studies on regional inequality and development in Indonesia. They offer very interesting case studies for the formulation of policies and programs to reduce regional inequalities, because as the worlds largest archipelagic country with more than 13 thousand islands and 300 ethnic groups, Indonesia is spatially diverse in terms of its ecology, natural resource endowments, economy, ethnicity and culture. This book can be used as a textbook for undergraduate and graduate students who are interested in national economic development and regional income inequality. It is also beneficial for practitioners and policy makers who are in charge of the formulation, implementation and evaluation of development policies and programs.

In his seminal work on national development and regional inequality, Williamson (1965) predicts that regional income inequality will pass through three distinct phases as a nation moves through the early development stages to maturity. In the early stages of economic development, regional income inequality will increase, largely because of the disequilibrating effects of factor mobility. This will be followed by a period of stability, characterized by a relatively high level of inequality between regions. Finally, a lessening of regional inequality will set in as the national economy matures and equilibrating forces take effect. This overall process, if plotted against national economic development, will result in a bell-shaped or inverted U-shapes curve. The early stages of development are also associated with rapid urbanization, though with a shift toward population dispersion as the economy matures. Other stylized facts in the process of development include industrialization, demographic transition, and changing inequality of income among population subgroups (Alonso, 1980). The concentration of population in and around large cities is usually accompanied by an increase in regional income inequality. Some researchers have argued that this population concentration and concurrent increase in regional inequality does not impede economic development, and may in fact favor it. Nonetheless, many national governments have introduced policies of balanced regional development. The main objective of this paper is to measure regional income inequality in the post-war Japan using Williamson's weighted coefficient of variation. Based on prefectural population and GDP data, it investigates longer-term trends in regional income inequality. A sectoral decomposition analysis is also performed to examine the extent to which each industrial sector contributes to the overall weighted coefficient of variation. We hope to gain a deeper understanding of the relationship between national development, industrialization, and regional inequalities in the post-war Japan.