class: center, middle, inverse, title-slide # Regional Income Disparities, Distributional Convergence, and Spatial Effects: ## New District-Level Evidence from Indonesia ### Carlos Mendez<br />Graduate School of International Development, Nagoya University<br /><br />Anang Budi Gunawan<br />Ministry of National Development Planning, Indonesia<br /><br />Felipe Santos-Marquez <br />Graduate School of International Development, Nagoya University ### Prepared for the 19th JEPA International Conference, 2020 --- ## Motivation: - Reducing regional inequality is important for socioeconomic cohesion, political stability, and sustain-able development. - Large regional inequality despite several policy efforts - New data to study regional inequality in Indonesia at the district level - Recent advances in methods to study the dynamics of inequality and the role of spatial dependence ## Research Objective: - Study the spatio-temporal dynamics of regional inequality across Indonesian districts over the 2000-2017 period ## Methods: - Spatial distribution dynamics framework of Fischer and Stumpner (2008) - Distributional convergence framework of Quah (1997) - Spatial filter decomposition of Getis (1995) ## Data: - 514 districts over the 2000-2017 period - Exact centroid coordinates of capital cities --- class: middle ## Main Results: 1. Stagnation at the bottom and multiple convergence clubs at the top of the distribution 2. **Significant and increasing spatial dependence** at the district level 3. Spatial dependence tends to increase income mobility mostly at the top of the distribution **Policy Implications** - National and regional policies aiming to promote sustainable development and regional inclusion are likely to be more effective when they account for the spatio-temporal dynamics of inequality - The performance of neighboring regions(spatial effects) plays an important role in shaping the regional income distribution - Overcoming clusters of stagnation and fostering upward mobility requires coordination across multiple local governmets. - The national/central government needs to support this regional coordination --- class: middle # Outline of this presentation 1. **Regional inequality and increasing spatial dependence in Indonesia** - The spatial distribution of regional income per capita - Increasing spatial dependency 2. **A framework to study the spatial dynamics of inequality** - Distribution dynamics - A spatial filter 3. **Distribution dynamics** - Non-spatial distribution dynamics - Spatially filtered distribution dynamics --- class: middle # (1) Regional inequality and increasing spatial dependence in Indonesia: ## The spatial distribution of regional income per capita in 2010 <img src="figs/fig10.png" style="width: 90%" /> --- class: middle # (1) Regional inequality and increasing spatial dependence in Indonesia: ## The spatial distribution of regional income per capita in 2017 <img src="figs/fig20.png" style="width: 90%" /> --- class: middle # (1) Regional inequality and increasing spatial dependence in Indonesia: ## Spatial connectivity structure <img src="figs/fig30.png" style="width: 90%" /> --- class: middle # (1) Regional inequality and increasing spatial dependence in Indonesia: ## Increasing spatial dependency <img src="figs/stam.jpg" style="width: 90%" /> --- class: middle, center # (2) A framework to study the spatial dynamics of inequality ## Distribution dynamics (part 1) <img src="figs/dynt.png" style="width: 80%" /> --- class: middle, center # (2) A framework to study the spatial dynamics of inequality ## Distribution dynamics (part 2) <img src="figs/fig45.png" style="width: 70%" /> --- class: middle # (2) A framework to study the spatial dynamics of inequality ## Getis filter <img src="figs/fig40.png" style="width: 90%" /> --- class: middle # (3) Distribution dynamics results ## Example using province level data <img src="figs/fig50.jpg" style="width: 99%" /> --- class: middle, center # (2) A framework to study the spatial dynamics of inequality ## Distribution dynamics (part 2) <img src="figs/fig45.png" style="width: 70%" /> --- class: middle # (3) Distribution dynamics results ## Using district level data <img src="figs/fig60.jpg" style="width: 99%" /> --- class: middle # (2) A framework to study the spatial dynamics of inequality ## Getis filter <img src="figs/fig40.png" style="width: 90%" /> --- class: middle # (3) Distribution dynamics results ## Spatially filtered distribution dynamics <img src="figs/fig70.jpg" style="width: 99%" /> --- # (5) Concluding Remarks - Measuring inequality requires an **evaluation of the entire distribution**, not just a single indicator - Measuring regional inequality requires an **evaluation of the role of spatial dependency** - Regional inequality across districts in Indonesia is characterized by: 1. **Stagnation at the bottom** and multiple **convergence clubs at the top** of the distribution 2. **Significant and increasing spatial dependence** at the district level 3. **Spatial dependence tends to increase income mobility mostly at the top** of the distribution - Recognizing spatial dependency patters is important for policy design and monitoring - Overcoming clusters of stagnation and fostering upward mobility requires **coordination across multiple local governments** - The national/central government needs to support this regional coordination --- class: center, middle # Thank you very much for your attention https://quarcs-lab.org <img src="figs/logo2.png" style="width: 20%" /> **Quantitative Regional and Computational Science Lab**