Determinants of Income Inequality in the Kalimantan Region

Abstract

Income inequality remains a critical issue in Indonesia, particularly in the Kalimantan region, where disparities in education, foreign direct investment (FDI), and economic growth significantly affect income distribution. This study examines the impact of education, FDI, and economic growth on income inequality using panel data regression analysis from 2015 to 2023. The results indicate that education significantly reduces income inequality, as higher education levels contribute to improved workforce quality and income distribution. Similarly, FDI negatively affects income inequality by creating job opportunities, increasing household incomes, and promoting economic growth. However, economic growth does not significantly influence income inequality, suggesting that other factors, such as inflation, purchasing power, and sectoral contributions, may play a more substantial role. The findings highlight the need for policy interventions, including improving education access, regulating FDI distribution, and ensuring inclusive economic policies to reduce income disparities. This study contributes to the ongoing discourse on income inequality by providing empirical evidence on the role of education and investment in fostering equitable economic development.