The Effect of Economic Growth, Education Level, and Energy Subsidies on Income Inequality in Indonesia in 2005-2019

ABSTRACT

Statistically, from 2005 to 2019, the number of poor people in Indonesia tends to decrease and economic growth tends to continue to show positive numbers, but income inequality in this period is classified as moderate to high inequality. It is suspected that there is a trade off, where when economic organizations increase, income inequality also increases.
Income inequality can be overcome by improving the quality of human resources, one of which is through improving education through a 12-year compulsory education policy and the existence of Job Training Institutions as a means of improving community skills. However, people who lack money for education tend to educate their children to work immediately and make money. The Indonesian government also issued an energy subsidy policy to meet the needs of underprivileged people. However, the realization was not as expected, the subsidies distributed were even enjoyed by the upper class. This makes the fuel subsidy policy not on target (Yulivia, 2012).
With government policies related to energy subsidies and efforts to improve education, it is expected to improve people's welfare and reduce income inequality The phenomenon is just the opposite, even suspected that economic growth also increases income inequality in Indonesia.

Income Inequality Theory
Income inequality is the relative structure of life in people in an area due to differences in Poverty Economic Growth Gini Ratio natural resources and available production factors (Kuncoro, 2004). According to Todaro & Smith (2011), income inequality can be measured by the Lorenz Curve, Size Distribution, and Gini Ratio. A country's economic inequality is said to be high if it has a Gini ratio between 0.50 to 0.70. Meanwhile, countries with relatively even income distribution if the Gini ratio is between 0.20 to 0.35.

Economic Growth Theory
Economic growth is the process of changing the economic condition of a country continuously towards a better condition in a certain period of time (Hasanah, 2016). The theory of Marxism born by Karl Marx has a theory that in the future, when capitalism reaches saturation point, the world community will transform into a world socialist society.
Although both reject capitalism, Neo-Marxist theory is different from Karl Max's theory, Neo-Marxist theory states that since the beginning of development, economic growth has actually caused a widening gap of inequality between upper and lower class society. Neo-Marxist theory which states that income inequality will widen along with increasing economic growth in the development process of a country (Syed Agung Afandi, Muslim Afandi, 2022). The theory of Neo Marxism is in line with research conducted by Pramata Maesza, Guntur Eko Saputro, Panji Suwarno (2022), which states that if economic growth increases, income inequality increases or has a significant positive effect. H1 = It is suspected that the variable Economic Growth has an influence on Income Inequality

Human Capital Theory
The level of education is a long-term process that uses structured procedures, in which students learn conceptual and theoretical knowledge for general purposes (Mangkunegara, 2013). Human Capital Theory (Jhingan, 2011) means that human resource investment is obtained by increasing the number of people who have skills, education, and experience for the development of a country.
In the International Labour Organization, the higher the education a person takes, the higher the wages received, workers with higher education also experience easier income growth than workers with less education (Wahyuni & Monika, 2016). In accordance with research conducted by Istikharoh, Whinarko Juli Prijanto, Rian Destiningsih (Istikharoh et al., 2020) which shows that the level of education has a significant effect on income inequality.

Theory of Government Spending
In the book Indonesian Economy by Dumairy (1996) which contains Keynes's theory related to government expenditure states the concept of calculating national income with the following expenditure approach: Y = C + I + G + X -M The variable Y represents national income (aggregate supply), while the variables on the right are called aggregate demand. Variable G symbolizes government spending, One form of government expenditure is the provision of subsidies, in Law Number 47 of 2009 concerning the State Budget for Fiscal Year 2010 Energy Subsidies are government policies in the energy sector by lowering energy production costs, increasing prices received by producers, or lowering prices paid by energy consumers. This is according to research conducted by Mustafid Nur Qosthory (2016) which states that energy subsidies have a significant relationship with income inequality. H3 = It is suspected that the variable Energy Subsidy has an influence on Income Inequality.

Data Types and Sources
This research was conducted based on secondary data obtained from the world bank, the central statistics agency, and the ministry of finance. This study used a quantitative approach with time series data type. The data used is annual data starting from 2005-2019. The variables in this study are income inequality, economic growth, education level, and energy subsidies.

Data Analysis Methods
The analysis test in this study used multiple linear regression analysis. Multiple Linear Regression Analysis is a technique used to measure the effect of two or more independent variables on a single bound variable (Hardani, S.Pd. et al., 2020). The dependent variable in this study is income inequality while the independent variable in this study is economic growth, education level, energy subsidies. Data analysis and processing tools using SPSS 26 software. The

Coefficient of Determination
The calculation of the determinant coefficient is used to measure how far the independent variable is able to explain the dependent variable. If the value of the coefficient is close to 1, it means that the independent variable is able to explain almost all dependent variables. Meanwhile, if the value of the coefficient of determination is close to 0, it means that the independent variable is less able to explain the dependent variable (Ghozali Imam, 2018).

Fig 2. Normality Test Source: Output SPSS
From the test results using SPSS software, the value of Asymp. Sig. (2-tailed) of 0.2 or greater than 0.05, then according to applicable provisions it can be concluded that the data is normally distributed. Avaliable at: www.ijssers.org

Fig 3. Hetrocadicity Test
Source: Output SPSS Because there is no clear pattern and the dots spread above and below the number 0 on the Y axis, it can be concluded that the variables in the study did not occur heterocadicity.

Fig 4. Multicollinearity Test
Source: Output SPSS From the results of the Multicollinearity Test conducted using SPSS 26 software, it is known that: Because there is no independent variable that has a Variance Inflation Factor (VIF) value of less than 10 and the absence of an indep Table 2 Autocorrelation Test Results endent variable with a tolerance value of less than 0.10, it can be concluded that there are no serious symptoms of multicollinearity between independent variables in the regression model.

Fig 5. Autocorrelation Test
Source: Output SPSS The regression coefficient of Energy Subsidies reaches 0.0001. The point is that if energy subsidy spending increases by 1 billion rupiah, it will increase the Gini ratio by 0.0001.

The Effect of Economic Growth on Income Inequality in Indonesia
The variable of partial economic growth does not have a significant effect on income inequality in Indonesia in 2005-2019. This research is in line with research conducted by Dinda Syahri and Yesi Gustiara (2020) which explains that Economic Growth has no influence on Income Inequality.
Economic growth reflects a country continuously moving towards better or worse conditions over a certain period, economic activity does indeed increase economic growth, but economic activity only benefits the upper class. Therefore, the data shows that any increase in economic growth has no effect on income inequality.

The Effect of Education Level on Income Inequality in Indonesia
The variable level of education partially has a significant effect on income inequality in Indonesia in 2009-2019. This research is in line with research conducted by Istikharoh, Whinarko Juli Prijanto, Rian Destiningsih (2020), which explains that education level has an influence on income inequality.
The 12-year compulsory education program organized by the government does not fully exempt students from the contribution of education fees, costs that are not borne by the government will be borne by students (Sholikhah et al., 2014). Income inequality cannot narrow because people who can afford more education will receive higher education than individuals who cannot afford education outside government assistance. Residents who cannot afford to pay are directed by their parents to work to help meet the needs of daily life.

The Effect of Energy Subsidies on Income Inequality in Indonesia
Based on the tests that have been conducted, the Energy Subsidy Variable partially has a positive and significant effect on Income Inequality in Indonesia in 2005-2019 which means that there is acceptance of the hypothesis, where when energy subsidy spending increases, it will significantly increase income inequality as well. This research is in line with research conducted by Mustafid Nur Qosthory (2016), which explains that Energy Subsidies have an influence on Income Inequality.
Subsidies in Indonesia are given to keep the price of basic necessities stable, reduce inequality, and help the poor (Kristinawati et al., 2018). However, energy subsidies actually increase income inequality because they are allocated not on target, which happens instead of people from the upper class also enjoy these subsidies.. Energy subsidies are highly sought after because they have a role in meeting basic human needs such as food, shelter, health services, and education, as well as contributing to social development (Qosthory, 2016).

CONCLUSIONS AND RECOMMENDATIONS
1. The Economic Growth Variable (X1) has no influence on Income Inequality in Indonesia based on statistical calculations that have been carried out. Economic activities only benefit the upper class, economic growth is increasing, but not accompanied by an increase in welfare for the lower class. 2. The variable Education Level (X2) has a significant influence on Income Inequality in Indonesia based on statistical calculations that have been carried out.
Residents who can afford more education fees can get higher education, Finally, graduates from education are from the upper class population only. It is expected that the government will reduce the cost of education through more effective programs or policies because for underprivileged people, existing education programs are still not helpful enough. 3. The Energy Subsidy Variable (X3) has a significant influence on Income Inequality in Indonesia based on statistical calculations that have been carried out. This is due to the provision of energy subsidies that are not right on target, where all groups of society enjoy the allocation of energy subsidies. Energy subsidy policy is better reviewed so that it can be more targeted and tighten the system of allocation of aid to the lower class so that it can reach the right hands.