Electronic Theses and Dissertation

This research aims to analyze the effect of change in economic growth and income inequality on poverty in Indonesia. According to the objectives, this research will estimate elasticity of poverty to growth and inequality for thirty three provinces in Indonesia using Headcount ratio, Gini Ratio and per capita GRDP for each 33 province on year 2007 to 2010. The result shows that economic growth has significantly negative effect on poverty for period 2007 - 2010. Nevertheless, poverty reduction is not driven sufficiently by income inequality effect. Economic growth on hat period actually increased income inequality. And inequality as a result of increasing in economic growth on that period precisely increase poverty. Reducing inequality that occurs from economic growth indicates a redistribution of income from the rich to the poor Besides, impact of economic growth on poverty through income inequality effects is not high. Therefore, government needs to maintain achieved pro-poor growth by paying attention on effort to increase economic growth effect on the poverty reduction and support equal income distribution in order to stimulate poverty alleviation.

Keywords : economic growth, income , inequality, poverty

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