Abstract
Using nationwide household surveys, this study investigates the roles of education in expenditure inequality in two archipelagic Asian countries: Indonesia and the Philippines. Since disparity between urban and rural areas is one of the main determinants of expenditure inequality and there is a large difference in educational endowments between urban and rural areas, an analysis is conducted in an urban-rural framework. Both countries achieved a notable reduction in expenditure inequality in the 2010s. In Indonesia, the reductions of disparity between education groups and tertiary education group’s within-group inequality in urban areas were the main contributors to the reduction of overall expenditure inequality. In the Philippines, the reductions of expenditure disparities between urban and rural areas and between education groups were the main contributors to the reduction of overall expenditure inequality. In 2018, Indonesia and the Philippines had the same level of expenditure inequality. However, compared to developed countries, their expenditure inequalities are still very high. In Indonesia, expenditure inequality among those with secondary education is the major determinant of overall expenditure inequality. Thus, reducing the secondary group’s within-group inequality is necessary. At the same time, the tertiary group’s within-group inequality should be decreased in urban areas. In the Philippines, expenditure inequality among those with tertiary education is the major determinant of overall expenditure inequality. Thus, reducing the tertiary group’s within-group inequality is imperative. At the same time, the disparity between education groups should be decreased in both urban and rural areas.
We are grateful to the Japan Society for the Promotion of Science (Grant-in-Aid for Scientific Research 18 K01589, 18 K01635, 23K01409 and 23KK0029).
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Notes
- 1.
Because Indonesia and the Philippines have different education systems, the number of years of education assigned to each level of education differs between them (see Table 10.11 in the appendix).
- 2.
To measure the amount of education a household owns, this study uses years of education completed by the household head.
- 3.
The formula of the Theil index T will be presented in the methodology section. In this study, another Theil index, the Theil index L, is also used to perform a hierarchical inequality decomposition analysis. But the result is similar to the one by the Theil index T qualitatively and thus it is not presented.
- 4.
These studies include Ikemoto (1985) for Malaysia, Glewwe (1986) for Sri Lanka, Ikemoto and Limskul (1987) for Thailand, Ching (1991) for the Philippines, Tsakloglou (1993) for Greece, Estudillo (1997) for the Philippines, Akita et al. (1999) for Indonesia, Kanbur and Zhang (1999) for China, Parker (1999) for U.K., Dickey (2001) for Great Britain, Liu (2001) for Vietnam, Gray et al. (2003) for Canada, Mukhopadhaya (2003) for Singapore, Rao et al. (2003) for Singapore, Motonishi (2006) for Thailand, Tang and Petrie (2009) for Australia, and Akita and Miyata (2013) for Indonesia.
- 5.
Table 10.11 in the appendix presents the way how to determine the number of years of education completed by the head of household.
- 6.
Ram (1990) argued that educational inequality may decline monotonically with educational expansion for less-developed countries which have already reached a certain level of educational attainment and have adopted free and universal primary education.
- 7.
The between-sector inequality refers to expenditure disparity between the urban and rural sectors, while the between-group disparity refers to expenditure disparity between educational groups.
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Akita, T., Miyata, S. (2024). Education and Expenditure Inequality in Indonesia and the Philippines: A Comparative Analysis in an Urban and Rural Dual Framework. In: Resosudarmo, B.P., Mansury, Y. (eds) The Indonesian Economy and the Surrounding Regions in the 21st Century. New Frontiers in Regional Science: Asian Perspectives, vol 76. Springer, Singapore. https://doi.org/10.1007/978-981-97-0122-3_10
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