The decline and levelling off of earnings inequality: boon or bane for a growing economy?

Sari, Virgi ORCID: 0000-0003-4319-6173 and Dimova, Ralitza (2024) The decline and levelling off of earnings inequality: boon or bane for a growing economy? European Journal of Development Research, 36 (6). 1448 - 1470. ISSN 0957-8811

Text (Sari_decline-and-levelling-off--published) - Published Version Available under License Creative Commons Attribution. Download (1MB)

• Author
• Scopus publication

Abstract

This paper investigates evidence on deficits in economic inclusion, focussing on the labour market in Indonesia. Increasing job polarization and an accompanying rise in earnings inequality on account of technological development and globalisation over the past few decades have augmented concerns about the attainability of governments’ perennial objective of inclusive growth. However, there are circumstances in which declining or levelling earnings gaps may be more of a bane than a boon for a country’s long-term economic health. Using the particularly interesting case of Indonesia, which has reduced and subsequently levelled off its earnings inequality in the midst of impressive growth, this paper studies how structural factors and labour market policies influence dynamics of inequality. The study finds evidence of a strong role of structural characteristics, which appears to indicate that reductions in earnings inequality may be more of a bane than a boon for Indonesia’s long-term prosperity. The paper concludes with broader insights and a discussion on policy implications that extend beyond the Indonesian context.

Item Type:	Article
Official URL:	https://www.palgrave.com/gp/journal/41287
Additional Information:	© 2024 The Authors
Divisions:	Social Policy
Subjects:	H Social Sciences H Social Sciences > HB Economic Theory
JEL classification:	J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. J - Labor and Demographic Economics > J0 - General > J08 - Labor Economics Policies O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources; Human Development; Income Distribution; Migration
Date Deposited:	01 Jul 2024 11:21
Last Modified:	12 Dec 2024 04:21
URI:	http://eprints.lse.ac.uk/id/eprint/124051

Actions (login required)

View Item