Economic zones and local income inequality: Evidence from Indonesia

Autor: Cecília Hornok, Dewa Gede Sidan Raeskyesa
Rok vydání: 2023
Předmět:
Zdroj: The Journal of Economic Inequality.
ISSN: 1573-8701
1569-1721
Popis: Economic zones can be powerful drivers of economic growth in developing countries.However, less is known about their distributional impact on the local society. This paperprovides empirical evidence from Indonesian provinces on the relationship between eco-nomic zones and within-province income inequality. We apply fixed-effects panel estima-tion to province-level data for the whole of Indonesia, which we then complement withseparate studies on the opening of three economic zones in three provinces using the syn-thetic control method. The results suggest that the above relationship is positive overall.The estimated rise in income inequality after a zone opens is, however, relatively small onaverage and may be short-lived. Moreover, the average estimate masks large regional dif-ferences, which suggests that the inequality implications of economic zone policies dependon local conditions. One possible explanation for the rise in inequality is that the unskilledpopulation benefits disproportionately less from the policy.
Databáze: OpenAIRE
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