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Revisiting the Impact of Consumption Growth and Inequality on Poverty in Indonesia during Decentralisation
This article analyses the consumption growth elasticity and inequality elasticity of poverty in Indonesia, with a particular focus on the decentralisation period. Using provincial panel data, we show that the effectiveness of growth in alleviating poverty across provinces was greater during decentra...
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Published in: | Bulletin of Indonesian economic studies 2014-09, Vol.50 (3), p.461-482 |
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Main Authors: | , , |
Format: | Article |
Language: | English |
Subjects: | |
Citations: | Items that this one cites Items that cite this one |
Online Access: | Get full text |
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Summary: | This article analyses the consumption growth elasticity and inequality elasticity of poverty in Indonesia, with a particular focus on the decentralisation period. Using provincial panel data, we show that the effectiveness of growth in alleviating poverty across provinces was greater during decentralisation-that is, between 2002 and 2010-than at any other point since 1984. The growth elasticity of poverty since 2002 is estimated to have been -2.46, which means that a 10% increase in average consumption per capita would have reduced the poverty rate by almost 25%. However, we also find that rising income inequality negated a quarter to a third of the 5.7-percentage-point reduction in the headcount poverty rate. This increasing inequality has contributed to a lower level of pro-poor growth than that maintained in Indonesia before decentralisation. |
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ISSN: | 0007-4918 1472-7234 |
DOI: | 10.1080/00074918.2014.980377 |