The Determinants of Income Inequality in Bangka Belitung Province

Abstract

Purpose: this research study focused on analyzing the conditions of income distribution and the determinants of the low Gini coefficient, namely the sectors that have the highest contribution, including the industrial, agricultural and trade sectors and labor productivity in the industrial sector in Kepulauan Bangka Belitung Province. Methods: the income distribution phenomenon in Kepulauan Bangka Belitung Province during the 2007-2018 period became the basis for analyzing the determining variables of income distribution including the industrial sector, the agricultural sector, the trade sector and the industrial labor productivity. The income distribution indicator was measured from the Gini coefficient value using the Panel Data Regression approach to determine the effect of these variables on the Gini coefficient in all regencies / cities in the Kepulauan Bangka Belitung Province. Results: the results showed that the agricultural sector, industrial sector and trade sector had a negative and significant effect on the Gini coefficient. Meanwhile, labor productivity in the Industrial Sector had a significant positive effect on the Gini coefficient. The results showed that the determinant of income distribution was the agricultural sector. Further findings prove that the agricultural, industrial and trade sectors improved the income distribution. Conclusions and Relevance: this study implied for the efforts to increase the agricultural market orientation towards high productivity which was inversely contrast to the output of workers in the industrial sector proven to reduce income distribution. Therefore, the structural transformation towards industrialization and market-oriented efforts from the agricultural sector were necessary.