Decomposition of the Theil Index in Inequality Analyses in Yogyakarta Indonesia

Abstract

Yogyakarta is Indonesia’s province with the highest inequality at the Gini ratio of 0.417. This research brings into focus inequality in Yogyakarta and inequality distribution by regions and the economic sectors. Methodologically, this research uses the descriptive quantitative analysis model to spell out inequality distribution. The analysis units are regions and the economic sectors at provincial and district/city levels. The parameter used is the Theil index with the approach of inequality of between-region, between-sector, within-region, and within-sector. The results exhibit that at the provincial level, Yogyakarta has a Theil index of 0.686. The region with the highest inequality is Bantul (0.737), whereas other areas come with severe inequality (> 0.5). In regard to between-region inequality, the highest inequality distribution is between Sleman and Kulon Progo and Gunungkidul. At district/city levels, the highest inequality is identified in the agricultural, trade, and industrial sectors. Finally, the highest inequality distribution is between the construction sector and the agricultural, trade, and industrial sectors.