Top Incomes in Indonesia, 1920-2004

Using taxation and household survey data, this paper estimates top income shares for Indonesia during 1920-2004. Our results suggest that top income shares grew during the 1920s and 1930s, but fell in the post-war era. In more recent decades, we observe a sharp rise in top income shares during the late-1990s, coinciding with the 1997-98 economic crisis, and some evidence that top income shares fell in the early-2000s. For pre-war Indonesia, we decompose top income shares by income source, and find that for groups below the top 0.5%, a majority of income was derived from wages. Where comparable data are available, top in come shares in Indonesia are generally higher than in other countries, a finding that is at odds with the view that Indonesia is a relatively egalitarian society.