Rabu, 30 Maret 2016


ECONOMIC WELFARE

Conference Title: 3rd International Conference on “Trends in Multidisciplinary Business and Economic Research” (TMBER 25-26 March 2016). TMBER©2016 Global Illuminators Bangkok, Thailand



Study Title: The Gap of Resources Allocation and Income Inequality

Author 1: Nikensari, Sri, Indah*. Universitas Negeri Jakarta, Indonesia.
Author 2: Santosa, Purbayu, Budi. Universitas Diponegoro, Indonesia.
Author 3: Sugiyanto, FX. Universitas Diponegoro, Indonesia.
Presenter: Nikensari, Sri, Indah
Correspondence: Nikensari, Sri, Indah
 *Student of Doctoral Program at Universitas Diponegoro, Indonesia


ABSTRACT

In recent years, many countries have a Gini index above 0.4, a quantity index that get warning limits by UNDP. According to the development of the theory of welfare economics (first theorem), income inequality occurs because the allocation of resources in a country is not distributed equitably. Research with the secondary data from Indonesia, aims to prove that the increase in resources allocation gap will increase income inequality. Education Gap, Labor Skill Mismatch and Credit Allocation Gap are developed and derived from the gap of resources allocation as independent variables.

All of the data obtained from the Central Bureau of Statistics, except data relating to credit allocation Gap, this is obtained from the Central Bank of Indonesia. Using data from 33 provinces in Indonesia during 2007-2013, the results of data processing of each variable indicates that the gap of resources allocation has increased during the years of the study. The results of the panel data analysis shows that all independent variables have a positive effect to income inequality. The results of this study prove that in achieving welfare, it is necessary to allocate resources efficiently (first theorem) and equitably, especially for the lower levels of society. The results also proved that to look at the causes of income inequality in the process of economic growth, we recommend using a variable gap.
Keywords: First Theorem, Income Inequality, Gap of Resources Allocation.

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