The Effect of Trade Openness on Income Inequality: Case Study in Indonesia
64th ISI World Statistics Congress - Ottawa, Canada
Format: CPS Abstract
Keywords: income, indonesia, inequality, trade
Session: CPS 27 - Statistical income analysis
Monday 17 July 5:30 p.m. - 6:30 p.m. (Canada/Eastern)
Indonesia’s trade balance shows exceptional performance as it experiences a surplus from 1976 to 2021, except from 2012 to 2014, and 2018. Despite the positive balance, the Gini Ratio Index has escalated sharply since 2010, indicating that income inequality is widening. This paper attempts to provide insight into the effect of international trade on income inequality, focusing on Indonesia’s sub-national level. The analysis uses panel regression to explore whether trade openness, indicated by the share of total exports and imports to Gross Regional Domestic Product (GRDP), delivers different effects on income inequality across the province.