Letters in Spatial and Resource Sciences

, Volume 7, Issue 3, pp 133–147 | Cite as

Urbanization and expenditure inequality in Indonesia: testing the Kuznets hypothesis with provincial panel data

  • Perdamen Sagala
  • Takahiro Akita
  • Arief Anshori Yusuf
Original Paper


Focusing on Indonesia, this study analyzes the relationship between inequality and the process of urbanization. It performs a panel data regression analysis to test the Kuznets inverted-U hypothesis for urbanization based on a provincial panel data set of 33 provinces over the period 2000–2009, constructed by using the core National Socio-economic Survey (core Susenas). Our results support the Kuznets inverted-U hypothesis, whether the Gini coefficient or the Theil indices are used as a measure of inequality. According to our estimates, expenditure inequality would reach the peak at an urbanization rate of around 46–50 %. Since the 2010 urbanization rate is 50 %, this indicates that expenditure inequality has already attained the peak value. Thus, further urbanization would decrease expenditure inequality, but all other things being equal.


Urbanization Expenditure inequality Kuznets hypothesis Panel data regression Indonesia 

JEL Classification

O18 R11 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  • Perdamen Sagala
    • 1
  • Takahiro Akita
    • 1
  • Arief Anshori Yusuf
    • 2
  1. 1.Graduate School of International RelationsInternational University of JapanMinami-UonumaJapan
  2. 2.Center for Economics and Development StudiesUniversity of PadjadjaranBandungIndonesia

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