Labor Mobility, Fiscal Decentralization, and Economic Convergence Bettwen Regions in Indonesia
The purpose of this study is to analyze the economic convergence between regions in Indonesia. By using a panel
data of 33 provincial regions in 1987-2014, analysis of economic convergence between regions in Indonesia is divided into
two parts, sigma convergence and beta convergence. It was found that a decline in economic disparity between regions in
Indonesia or sigma convergence. Economic convergence that occurs due to poor regions grows faster than other one or beta
convergence, with the convergence speeds of 0.05 per cent and takes as long as 1,514 years for achieving equality.
Convergence can be accelerated to 0.20 by controlling variable labor mobility and fiscal decentralization policy, while the
time required for achieving equality among regions is 352 years.
Keywords- Economy Disparity, Sigma Konvergence, Beta Konvergence Unconditional, Beta Konvergensi Conditional.