The Importance Of Economic Inequality In Indonesia

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In the past thirty years, globalization and market openness lead world to a better stage of wealth, however, it is inevitable that without government intervention this prosperity is concentrated in the hands of the small elite. The uneven of wealth distribution or the gap between the rich and the poor called economic inequality. This essay will argue that the government of Indonesia needs to introduce some policies to reduce economic inequality because economic inequality has no benefit at all, Indonesia is a democratic country which aims to improve public welfare, and Indonesia, with the rest of the world, wants to achieve Sustainable Development Goals (SDGs). Economic inequality is commonly translated as income inequality. Based on OECD Factbook (2011), income inequality is measured as household disposable income in a particular year, consists of earnings, self-employment and capital income and public cash transfers then deduct income taxes and social security contributions paid by households. The income of the household is attributed to each of its members, with an adjustment to reflect differences in needs for households of different sizes (p. 80). Moreover, economic inequality is measured by Gini coefficient, which is based on the comparison of cumulative proportions of the population against cumulative proportions of income they receive, and it ranges between 0 in the case of perfect equality and 1 in the case of perfect inequality. According to Indonesia's Statistics
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