TY - UNPB
T1 - Economic Zones and Local Income Inequality: Evidence from Indonesia
AU - Hornok, Cecília
AU - Raeskyesa, Dewa Gede Sidan
PY - 2022
Y1 - 2022
N2 - Economic zones can be powerful drivers of economic growth in developing countries. However, less is known about their distributional impact on the local society. This paper provides empirical evidence from Indonesian provinces on the relationship between economic zones and within-province income inequality. Estimates from panel regressions and synthetic control case studies suggest that this relationship is positive overall. The estimated rise in income inequality after a zone opens is relatively small on average and may be short-lived. However, the average estimate masks large regional differences, which suggests that the inequality implications of economic zone policies depend on local conditions. One explanation for the rise in inequality is that the unskilled population benefits disproportionately less from the policy. As a remedy, we propose education and training programs that target the poor and unskilled and in which companies also actively participate.
AB - Economic zones can be powerful drivers of economic growth in developing countries. However, less is known about their distributional impact on the local society. This paper provides empirical evidence from Indonesian provinces on the relationship between economic zones and within-province income inequality. Estimates from panel regressions and synthetic control case studies suggest that this relationship is positive overall. The estimated rise in income inequality after a zone opens is relatively small on average and may be short-lived. However, the average estimate masks large regional differences, which suggests that the inequality implications of economic zone policies depend on local conditions. One explanation for the rise in inequality is that the unskilled population benefits disproportionately less from the policy. As a remedy, we propose education and training programs that target the poor and unskilled and in which companies also actively participate.
UR - https://www.ifw-kiel.de/publications/kiel-working-papers/2022/economic-zones-and-local-income-inequality-evidence-from-indonesia-17363/
M3 - Working Paper/Preprint
T3 - Kiel Working Paper
BT - Economic Zones and Local Income Inequality: Evidence from Indonesia
PB - Kiel Institute for the World Economy
CY - Kiel
ER -