THE IMPACT OF WOMEN’S

EMPOWERMENT ON INCOME
INEQUALITY IN INDONESIA
Ismi Rahayu

Supervisor:
Takeshi INOUE
Koji KAWABATA
INTRODUCTION
• Gender equality is a great driver of sustainable development, but Indonesia is a
country that has a high gender gap. According to the 2020 Global Gender Gap
Index (GGGI) report, Indonesia ranks 85th out of 153 countries with score 0.7 and
is also below the ASEAN gender equality.
• The gender gap in education, political participation, and employment
opportunities should therefore be reduced not only because it is equitable to do
so, but also because it will have beneficial consequences on many other society-
wide outcomes (Duflo, 2012)
• Higher gender equality may support economic growth by allocating female labor
to its more productive use (Bertay et al., 2020)
• Growth and income inequality are positively associated because the top income
groups income is more sensitive to growth (Rubin & Segal, 2015)
• Many developing countries achieved high growth rates in different periods but
poverty does not reduce significantly in these periods due to increase in income
inequalities. They implied a pro-poor growth strategy does not have to only focus
on economic growth, but could also be combined with an active policy of income
redistribution (Tabassum & Majeed, 2008)
RESEARCH OBJECTIVE

• Does women’s empowerment have impact on

income equality in Indonesia?
LITERATURE

• Gonzales et. al. (2015) explained while the concepts of gender and
income inequality have mostly been treated separately in the
literature, they can interact via inequality of economic outcomes and
inequality of opportunities
• Forsythe, Korzeniewicz, and Durrant (2000) used gender
empowerment measure (GEM) in their paper to evaluate the relative
significance of women’s participation in the professional and political
arenas on development.
LITERATURE
• Equal distribution of education is important to reduce the income
gap. A country with more educated and skilled people have less
income inequality. Because if inequality in education increases in a
country it badly affects the income level of the country because less-
educated people do not have the ability to increase their living
standard (Munir & Kanwal, 2020)
• Higher gender equality would contribute more to the higher income
equality and suggesting that the propagation of gender equality
would also be the effective way to expand equality in income. Higher
gender equality in education, health, economics participation and
political empowerment translate into economic equality (Baloch,
2018)
DATA AND METHODOLOGY
• The measurement of women empowerment in this paper will be
represented by gender empowerment measure index/GEM
(political empowerment and economic participation and
oppportunity) and gender development index/GDI (education
attainment and health).
• As income inequality determinants, share of agriculture and
industry on GDP, GDP per capita, and government expenditure are
used as control variables.
• For the analysis, this paper uses data of 32 provinces in Indonesia
from 2010 to 2019 provided by BPS – Statistics Indonesia. Following
Baloch (2018), Different General Moment of Method (Diff-GMM) will
be used for the analysis.

•𝐺𝐼𝑁𝐼𝑖𝑡 = 𝛼 + 𝛽 𝐺𝐼𝑁𝐼𝑖𝑡−1 + 𝑊𝑂𝑀𝐸𝑁′𝑖𝑡 𝛾 + 𝑋′𝑖𝑡 𝛿 + 𝜀𝑖𝑡

DATA AND VARIABLE OVERVIEW
EMPIRICAL RESULT 1
• Consistent with Forsythe, Korzeniewicz, and Durrant (2000)
where women’s empowerment is shown to have a positive
impact on development (economic growth). This study
shows that by empowering women and reducing gender
gap, income inequality can be reduced.
• The significant effect of share of agriculture and industry
sector shows that in developing countries, a move from
agriculture to the industrial sector is expected to improve
the distribution of income by increasing the income of
lower income households.
• The result on income per capita and its quadratic form of
this paper support Kuznets (1955) suggestion that in the
process of economic development, inequality will first
increase and then decrease.
• Regarding government expenditure, the result supports
Anderson et al. (2016) where they find evidence of a
moderate positive relationship between total government
spending and income inequality
EMPIRICAL RESULT 2
• The model does not give different result
when index components are applied in
the analysis.
• Regarding economic participation and
political empowerment, the result can be
a reason to support women in the labor
force because their participation is still
less than 50%
• More involvement of women in
parliament can improve incentives and
policies for women in the labor force
and enrollment in higher education, thus
increasing the average level of human
capital.
• Unequal access to education is seen as
one of the drivers of income inequality in
Indonesia (Chongvilaivan and Kim, 2016),
and this paper does not show different
result.
CONCLUSSION
• The role of women in income inequality reduction is evident
through political and economic participation. Through economic
participation, lower income households can increase their income
when more women are active as professional workers.
• Education attainment with support for increasing women in the
labor force will have a significant impact in reducing income
inequality since better education and health condition lead to good
opportunities in the economy and a high income.
• For future research, The Gender Inequality Index (also by UNDP),
not used in this study, is a better measurement because it covers all
the dimensions of empowerment in one composite index.
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APPENDIX (CORRELATION MATRIX)