INCOME INEQUALITY AND DEVELOPMENT FACTORS: AN EMPIRICAL STUDY WITH PANEL DATA APPROACH
Keywords:
Income inequality, HDI, Economic Growth, unemployment, REMAbstract
Income inequality remains one of the main challenges in economic development in Indonesia. This study aims to empirically analyze the effects of the Human Development Index (HDI), economic growth, and unemployment rate on income inequality across 34 provinces in Indonesia from 2019 to 2024. Using panel data regression with the Random Effect Model (REM), the results reveal that the unemployment rate has a positive and significant impact on income inequality, while HDI has a negative and moderately significant effect. In contrast, economic growth does not significantly influence income inequality. These findings imply that income inequality can be reduced by improving human development and decreasing unemployment. Policies should focus on inclusive development, enhancing education and healthcare access, and expanding employment opportunities through local economic empowerment
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