Factor decomposition of income inequality change : Japan\u27s regional income disparity from 1955 to 1998

We propose a method for the decomposition of inequality changes based on panel data regression. The method is an efficient way to quantify the contributions of variables to changes of the Theil T index while satisfying the property of uniform addition. We illustrate the method using prefectural data from Japan for the period 1955 to 1998. Japan experienced a diminishing of regional income disparity during the years of high economic growth from 1955 to 1973. After estimating production functions using panel data for prefectures in Japan, we apply the new decomposition approach to identify each production factor’s contributions to the changes of per capita income inequality among prefectures. The decomposition results show that total factor productivity (residual) growth, population change (migration), and public capital stock growth contributed to the diminishing of per capita income disparity

Firm agglomeration and aggregate fluctuations

This study uses Indonesian plant-level manufacturing data from 2000 to 2014 to examine the role of individual firms located in agglomeration areas in generating aggregate fluctuations. While previous studies have used a method to decompose aggregate fluctuations into macroeconomic (sectoral) and firm-specific components, this paper illustrates an approach to further decompose the firm-specific component into higher and lower agglomeration groups. Our results suggest that plant-specific fluctuations in higher agglomeration areas have a greater impact on aggregate fluctuations than those in lower agglomeration areas, and the interaction or co-movements of plants in higher agglomerations areas have a significant role to drive aggregate fluctuations

Voting behavior in Indonesia from 1999 to 2014 : religious cleavage or economic performance?

In this study, we examine the voting behavior in Indonesian parliamentary elections from 1999 to 2014. After summarizing the changes in Indonesian parties\u27 share of the vote from a historical standpoint, we investigate the voting behavior with simple regression models to analyze the effect of regional characteristics on Islamic/secular parties\u27 vote share, using aggregated panel data at the district level. Then, we also test the hypothesis of retrospective economic voting. The results show that districts which formerly stood strongly behind Islamic parties continued to select those parties, or gave preference to abstention over the parties in some elections. From the point of view of retrospective economic voting, we found that districts which experienced higher per capita economic growth gave more support to the ruling parties, although our results remain tentative because information on 2014 is not yet available

Human capital externalities in Indonesian cities

Using Indonesian plant-level manufacturing data for 1996 and 2006, this study estimates the external benefits of human capital investment. The external benefits are identified from the relationship between plant-level wages and city-level human capital stock, after controlling for workers’ skill levels, plant fixed effects, and time-varying industry fixed effects. Our results suggest that the degree of human capital externalities depends on the size of the urban population, and that such externalities do not occur in cities that either too large or too small. In the case of the Indonesian manufacturing industry, evidence of human capital externalities is observed in cities with a population of between 500 thousand and 1,500 thousand

Covid-19 vaccine hesitancy in Indonesia: association between trust in the government and vaccination coverage

Although the effectiveness of Covid-19 vaccines has been verified in numerous studies globally, many countries have experienced low vaccination coverage due to the reluctance of people to be vaccinated. While the determinants of vaccine hesitancy are complex, we examine the effect of trust in the government on regional Covid-19 vaccination rates in Indonesia. Indonesia started its Covid-19 vaccination program earlier than other countries in Southeast Asia. However, the proportion of Indonesia\u27s population that is fully vaccinated is lower than in most of its neighboring countries. To examine how trust in the government affects vaccine coverage, we conduct a cross-section analysis that shows that the 2019 election vote margin of incumbent President Joko Widodo and the share of households with children who had participated in the government\u27s routine childhood immunization program as of 2019 have positive and statistically significant correlations with rates of full Covid-19 vaccination from September 2021 until March 2022. The results suggest that hesitancy to the Covid-19 vaccine associated with low trust in the government under Joko Widodo may have significantly delayed vaccination

Productivity and human capital agglomeration: evidence from indonesian cities

Using Indonesian plant-level manufacturing data for 1996 and 2006, this study estimates the external benefits of human capital investment. The external benefits are identified from the relationship between plant-level total factor productivity (TFP) and geographical human capital agglomeration with controlling for workers\u27 skill levels within a plant. The endogeneity problem in the human capital agglomeration is addressed by the instrumental variable (IV) method. We construct the IV by using the geographical distribution of European population in colonial Indonesia. Our IV estimates suggest that human capital agglomeration has a boosting effect on productivity, implying the existence of human capital externalities

The causal effect of urbanization on rural poverty reduction: quasi-experimental evidence using Indonesian urban area data

Developing countries have experienced rapid urbanization, though its causal effect on the welfare of rural households is still not clear. In this study, we utilize a severe earthquake in 2006, which hit one of the largest urban areas in Jawa Island of Indonesia, as a natural experimental event in order to identify the causal relation between urbanization and rural poverty reduction. Referring to the definition of the OECD (2012), we construct an original Indonesian urban area data set from population census data of 2000 and 2010. Then, we merge the data set with household panel data, as well as with village/town level census data. Our estimation results using the instrumental variable approach show that 1) effective market size growth as an index of population urbanization leads to an increase in per capita expenditure of households in rural villages, and especially those of the poorer villagers, and that 2) this increase in the welfare of the poor households seems to be brought about mainly by the increase in income from non-farm business