Inequality in the distribution of household expenditures in Indonesia: A theil decomposition analysis

This article explores the factors and forces underlying income inequality i n Indonesia using the Theil inequality decomposition technique with househo ld expenditure data from the 1987, 1990, and 1993 National Socio-Economic S urvey (Susenas). Among factors that are considered as having affected house hold expenditure inequality, differences in the level of education and urba n-rural disparity are found to be significant in overall inequality. Consid ering that more than 60 per cent of household heads have only an elementary education or less, raising general educational levels would have a signifi cant bearing on the reduction of overall inequality in Indonesia, ceteris p aribus. In contrast to education, gender inequality appears to be insignifi cant in Indonesia, as the ratio of mean household expenditure between male- headed and female-headed households was only 1.5.