L-PEG Lunch Research Seminar
Location Matters: Spatial Welfare Disparities in Indonesia
- Friday 11 October 2019
Matthias de Vrieshof
Matthias de Vrieshof 4
2311 BZ Leiden
Please register in advance at firstname.lastname@example.org to receive a copy of the paper & lunch.
In this paper, we describe the development of spatial welfare disparities in Indonesia between 2001 and 2017, organized around the theme of the country’s rapid urbanization and spatial agglomeration. As in earlier years, we find that spatial welfare level disparities remain substantial in this period. By location status, more urbanized and agglomerated regions show a stronger welfare growth but also higher inequality, -- although the trend is moderated in recent years--, suggesting unequal effects of urbanization and agglomeration on household welfare. Against this backdrop, we investigate the sources of spatial welfare disparities by empirically testing whether the disparities are due to differences in household endowment or differences in location-specific returns of such endowment. We find strong evidence that spatial welfare disparities are driven more by differences in location-specific returns of household endowment, rather than by differences in household endowment. This evidence, together with our finding on the district-specific determinants of returns of household endowment, suggests that improving interregional connectivity and access becomes critical for promoting welfare convergence across districts.