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http://dx.doi.org/10.13106/jafeb.2021.vol8.no7.0055

The Effect of Macroeconomic Factors on Income Inequality: Evidence from Indonesia  

SESSU, Andi (Faculty of Economic and Business, Department of Management, Universitas Muhammadiyah Prof. Dr. Hamka)
SAMIHA, Yulia Tri (Faculty of Education and Teacher Training, UIN Raden Fatah)
LAISILA, Maya (Faculty of Economic, Department of Management, Universitas Kristen Indonesia Maluku)
CHAMIDAH, Nurul (Faculty of Social Science & Political Science, Department of Communication, Universitas Muhammadiyah Cirebon)
MURDIFIN, Imaduddin (Faculty of Economics and Business, Department of Management, Universitas Muslim Indonesia)
PUTRA, Aditya Halim Perdana Kusuma (Faculty of Economics and Business, Department of Management, Universitas Muslim Indonesia)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.7, 2021 , pp. 55-66 More about this Journal
Abstract
The purpose of this study is to analyze the relationship and effects of variables both directly and indirectly (e.g., investment (INV), government expenditure (GE), unemployment rate (UR), economic growth (EG), and income inequality). The analytical phases consist, first, to transform the data using the Log Natural (Ln) method. Second, to check normality and multicollinearity of data. Third, to test direct effects of variables (government expenditure and investment effect on the unemployment rate and economic growth; investment on government expenditure; economic growth on unemployment rate; economic growth and unemployment rate on income inequality). Fourth, to test indirect effects using Sobel test, which involves UR and EG as intervening variable. Fifth, to test hypotheses with p-value < 0.05. The results of the study reveal that, of the 12 relationships, statistics show that 11 variations of the association have significant positive and negative effects. Theoretically, the different characters and goals of GE and INV in each country will have a different impact on EG and UR goals. The study provides an input, especially for the government. To create optimal EG through GE and INV, it is necessary to allocate budgets to industrial sectors that can absorb a massive labor force and to new economic growth sectors.
Keywords
Government Expenditure; Investment; Unemployment; Economic Growth; Income Inequality;
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