Arief Anshory Yusuf (Padjadjaran University):“Education expansion,the Kuznetsian tension and inequality: The Case of Indonesia".

Abstract:

This paper explores the impact of education expansion on structural transformation (ST) and income inequality in Indonesia, contextualized within the Kuznetsian framework of economic development. Using a natural policy experiment from the 1978-1979 extension of the school year, we apply Regression Discontinuity Design (RDD) to establish the causal relationship between increased education and labor shifts from agriculture to non-agricultural sectors. Additionally, we employ the Recentered Influence Function (RIF) Oaxaca-Blinder decomposition and the Atkinson inequality decomposition to assess how education expansion contributes to both within-sector and between-sector income inequality. Our findings suggest that while education expansion facilitates structural transformation, it also has complex implications for inequality, particularly within modern sectors.