ANALYSIS OF ECONOMIC GROWTH AND INEQUALITY ON POVERTY;

INDONESIA CASE STUDY

(Random Effect Panel Regression Approach)

Dicky Dita Firmansyah, Ely Uswatun, Wahyu Setiadi, Nugraheni

Universitas Gadjah Mada

Abstrak

Poverty is one of the main problems of developing countries. In the process of development a
country should pay attention to the quality of economic growth and reduce income inequality.
This study aimed to analyze the effect of economic growth and income inequality on poverty
in Indonesia. The analysis was performed using 33 provinces data in Indonesia during the
period 2000-2015. The results showed that poverty in Indonesia continued to decline from
2000 to 2015. From the results of Panel Data Regression using Random Effect method shows
that income inequality significantly affect to the elasticity of poverty with a value of 0.47.
While economic growth was also statistically significant effect on poverty with the elasticity
0.026. This indicates that the effect of the overflow the expected economic growth to reduce
poverty does not occur in Indonesia during the period 2000-2015.

Keywords: Poverty ,Indonesia; Inequality; Growth; Panel