The Effect of Internet Diffusion on Income Inequality: Cross-Regional Analysis in Indonesia

This research tests three hypotheses: 1) Internet diffusion has a significant effect on within-province income inequality in Indonesia; 2) Internet diffusion has a significant nonlinear effect on within-province income inequality in Indonesia; and 3) Internet diffusion has a significant effect on within-province income inequality in Indonesia differing by per capita income and education level. An important finding in this research is that Internet diffusion has a significant effect on income inequality as indicated by the positive influence of the Internet on income inequality between regions. In addition, the influence of the internet tends to be nonlinear and interacts differently with the heterogeneity of each province. The attached data is in .dta and .do format which can be processed with STATA by running the file. All data on each variable was downloaded from the BPS website which was processed into STATA. Several variables such as the Williamson index, real GDP per capita, and proportion of secondary and tertiary sectors were processed by researchers based on basic data from the website. The research method uses IV-2SLS with the Driscoll-Kraay standard error correction model. IneqPaper14.dta is a data set and Paper_2013-2019.do contains commands for processing data set files. IneqPaper15_2013-2019.dta is the final processed data.