Sharing Development Solutions for an Emerging Indonesia
Increases in inequality are being driven by the skill
premium and a greater impact of shocks
Change in Gini 2003-2010 Decomposed
Key Changes Leading to Higher Inequality
Residual Structure (shocks and variance)
Increasing Returns to Education
Percent of Total Change Explained
133
28
12
Changing Returns to Sector of Work
Key Changes Leading to Lower Inequality
Increased Endowments (e.g. urban migration,
higher education, more formal work)
Decreasing Urban-Rural Gap
Decreasing Provincial Gaps
Decreasing Work Type Gaps
-28
-23
-16
-8
Source: Susenas, World Bank calculations
Notes: Counterfactual simulations of consumption distribution using Juhn-Murphy-Pierce method and an occupational
choice model. Key results only shown
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Sharing Development Solutions
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