Academic journal article Journal of Economics and Economic Education Research

The Influence of Leading Commodity, Quality of Labor, Economic Structure, and Productivity of Labor against Inequality of Income among the Regencies in South Sumatra Province, Indonesia

Academic journal article Journal of Economics and Economic Education Research

The Influence of Leading Commodity, Quality of Labor, Economic Structure, and Productivity of Labor against Inequality of Income among the Regencies in South Sumatra Province, Indonesia

Article excerpt

INTRODUCTION

The main objective of economic development in addition to create high growth is also to reduce some levels of poverty and inequality of income between groups either communities or regions. The development policy that prioritizes economic growth has led to increasingly high levels of inequality. A major factor that causes the problem of income inequality is economic growth. High economic growth that is not followed by a proper policy of equitable income distribution would lead to an increasingly widening income inequalityy. This inequality may result of the presence of the polarization of development with determination of the urban center, the development of which does not produce the effect of deployment and the effect of trickle downwards (Jhingan, 2006; Leigh & Blakely, 2016).

The economic growth of a region can be determined by some factors of production which belong to the region; those are man-made factor of productions, natural resources, human resources, and the level of technology used. Human resource is an important factor of production in determining the level of economic growth because it closely relates to the skills and technological advances that determines the level of productivity in a given sector or region, also affects the inequality of income.

The existence of differences in natural resources, per capita income levels, and the availability of infrastructures are some of the factors which influence the inequality among regions. According to Muttaqim (2014); Dhyatmika & Atmanti (2013); Ginting (2014); Dellis et al. (2013), income inequality has caused by the uneven development among regions that led to imbalance in the economy. It can be seen from the more unequal the distribution of income among different layers of society and regions. So, do the distribution of GRDP in South Sumatra Province in the year 2015 varied among regencies and cities. The highest distribution was the regency of Musi Banyuasin 15.97%, followed by the regency of Muara Enim and regency of OKI 12.14% and 6.45%, respectively. The next lower was followed by regency of Banyuasin the 6.16% and then regency of Musi Rawas 4.18%, regency of Lahat 4.10%, regency of OKUT 3.25%, regency of OKU 3.15%, regency of Ogan Ilir 2.42% and the lowest is regency of OKUS 1.80% (BPS, 2015).

Other phenomena show that South Sumatra Province is the province's a fourth largest inequality level of income in Sumatra (Yeniwati, 2013). Gini index of South Sumatra became 0.4 in 2012, had previously been at the moderate level those were between 0.3-0.34 during 20082011 (BPS, 2013). It seemed there was a drastic increase in Gini index of South Sumatra that was much higher than Aceh province and Riau Kepulauan province, which only reached a number of about 0.35 in year 2012 (BPS, 2011).

Basically the implementation of development in South Sumatra Province is expected to increase revenue and generate equitable in prosperity, but in reality there still exists income inequality. Inequality in South Sumatra Region lasts and occurs in various forms and differences in aspects or dimensions, and due to various obstacles, both in terms of investment, or the potential of the natural resources belonging to the respective regency and city. Based on the description that has been outlined above, then the purpose of this research is to look at the influence of leading commodity, life expectancy, education, economic structure, and productivity of labor against the inequality of income regencies and cities in the province of South Sumatra, Indonesia.

LITERATURE REVIEW

The analysis carried out in this study refers to some theoretical literatures related to disparities between regions. Inequality is basically caused by the existence of differences in natural resources content and differences in demographic conditions in each region. As a result of these differences, the ability of the region to encourage development process is also different. …

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