The research paper titled “Economic Zones and Local Income Inequality: Evidence from Indonesia” authored by project member Cecília Hornok (Kiel Institute) and Dewa Gede Sidan Raeskyesa (Vienna University of Economics and Business) has been accepted for publication in The Journal of Economic Inequality.
The paper provides empirical evidence from Indonesian provinces on the relationship between economic zones and within-province income inequality. It combines panel estimation methods on province-level data for the whole of Indonesia with three synthetic control studies on the opening of individual economic zones in three different provinces. The results suggest that local income inequality tends to rise after an economic zone opens in a province. Although the average estimate is relatively small, it masks large regional differences, suggesting that the inequality implications of economic zone policies depend on local conditions.