Quotation Hornok, Cecilia, Raeskyesa, Dewa Gede Sidan. 2022. Economic Zones and Local Income Inequality: Evidence from Indonesia.




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.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Economic Zones and Local Income Inequality: Evidence from Indonesia
Year 2022
URL https://www.ifw-kiel.de/publications/kiel-working-papers/2022/economic-zones-and-local-income-inequality-evidence-from-indonesia-17363/
JEL D31, F63, O15, O25


Raeskyesa, Dewa Gede Sidan (Details)
Hornok, Cecilia (Kiel Institute for The World Economy, Germany)
Institute for International Political Economy IN (Details)
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