Inequality under dictatorship and democracy : longitudinal micro data, before and after the fall of general Soeharto

Abstract

Economic growth justified the autocratic New Order government of general Soeharto to the Indonesian public. The Asian financial crisis stalled growth and ended the New Order administration in 1998, then electoral democracy was instituted. This initiated a mass of policy changes, importantly including a large decentralization of fiscal and legislative power. This study explores the development of economic inequality in the tumultuous periods before and after the fall of Soeharto. The results show a decrease in inequality and converging provinces pre- crisis and for the whole period. However, in the post-crisis democratic period, income inequality increased, as did inequality between provinces.