THE INFLUENCE OF HDI, MSMES, SOCIAL EXPENDITURE, CAPITAL EXPENDITURE, AND WORKFORCE ON INCOME INEQUALITY IN MAGELANG CITY

Abstract

This study aims to examine the influence of the Human Development Index (HDI), the number of Micro, Small, and Medium Enterprises (MSMEs), social expenditure, capital expenditure, and number of workforce on income inequality in Magelang City. A quantitative approach was employed using multiple linear regression analysis based on time series data. The classical assumption tests confirm that the model meets the statistical requirements, including normality, absence of multicollinearity, heteroscedasticity, and autocorrelation. The findings reveal that HDI has a positive and significant effect on income inequality, suggesting that the benefits of development are not yet equitably distributed among all social groups. The number of MSMEs shows a positive but insignificant effect, indicating that their presence has not directly contributed to reducing inequality. Conversely, social expenditure, capital expenditure, and number of workforce have a negative and significant impact on income inequality, highlighting their role in fostering income distribution equity. These results suggest that local governments should prioritize inclusive and sustainable policies that promote equal access to development outcomes and economic opportunities.