Driving Inclusive Development: Determinants of Regional Income Inequality In The Former Kediri Residency, Indonesia
DOI:
10.46729/ijstm.v7i4.1442Published:
2026-08-04Downloads
Abstract
Income inequality remains a major challenge to achieving inclusive regional development. This study aims to analyze the effects of Gross Regional Domestic Product (GRDP), poverty, Human Development Index (HDI), Incremental Capital Output Ratio (ICOR), and capital expenditure on income inequality in the seven regencies/cities of the former Kediri Residency during 2018–2025. The study employed a quantitative approach using secondary panel data analyzed through panel data regression. Based on the Chow and Hausman tests, the Fixed Effect Model (FEM) was selected as the most appropriate estimation model. The results indicate that GRDP has a negative and significant effect on income inequality, while poverty, HDI, and capital expenditure have positive and significant effects. In contrast, ICOR does not significantly affect income inequality. Simultaneously, all independent variables significantly influence income inequality (Prob. F-statistic = 0.001). The model explains 51.7% of the variation in income inequality (R² = 0.517). These findings suggest that reducing regional income inequality requires inclusive development policies that promote equitable economic growth, accelerate poverty reduction, expand equal access to education and healthcare, and improve the allocation of capital expenditure toward balanced regional development.
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