AWALIYAH, Putri Regina (2025) The Effect of Public Health Expenditure, Education Expenditure, Internet Access, and Economic Growth on Income Inequality in Indonesia. Skripsi thesis, Universitas Jenderal Soedirman.

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Abstract

Income inequality remains a crucial issue in Indonesia’s economic development. Although the government has increased budget allocations for the health and education sectors and expanded internet access, inequality remains moderate and has not shown significant improvement. Therefore, this study aims to analyze the effect of public health expenditure, education expenditure, internet access, and economic growth on income inequality in Indonesia. This study employs a quantitative approach using panel data regression. The data consist of secondary data from 34 provinces in Indonesia, covering the period from 2013 to 2023, obtained from Statistics Indonesia (BPS) and the Ministry of Finance. The independent variables are public health expenditure, education expenditure, internet access, and economic growth, while the dependent variable is income inequality measured by the Gini ratio. The analysis employs the Random Effects Model (REM), selected through Chow, Hausman, and Lagrange Multiplier tests, to ensure the robustness of the estimation results. The findings reveal that public health expenditure, education expenditure, and economic growth have a positive but insignificant effect on income inequality. In other words, although these variables tend to increase inequality, their impact is not statistically strong. In contrast, internet access has a negative and significant effect on income inequality, suggesting that broader and more equitable internet access reduces disparities in income distribution across provinces in Indonesia. The implications of this study highlight the need for more practical and applicable policies. In the digital sector, the government should not only expand infrastructure in remote and disadvantaged regions (3T areas) but also provide internet subsidies for low-income households and promote digitalization among SMEs to create new economic opportunities. In healthcare, the budget should be directed toward improving the quality of local health centers (Puskesmas), increasing the number of medical personnel in remote areas, and expanding BPJS coverage. In education, the government could enhance programs such as BOS funding and KIP scholarships, as well as improve teacher quality through intensive training, especially in underdeveloped regions. Economic growth should also be directed toward labor-intensive sectors such as modern agriculture, digital SMEs, and the creative industry to ensure inclusive benefits. With these concrete steps, income inequality in Indonesia can be reduced more effectively and sustainably.

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