DETERMINANTS OF ECONOMIC DISPARITIES AMONG REGENCIES AND CITIES IN CENTRAL JAVA, 2015–2023

Abstract

Interregional economic disparity represents a persistent structural challenge in the development of Central Java Province, where economic growth remains disproportionately concentrated in major urban centers, leaving peripheral areas underdeveloped. This study aims to investigate the determinants of economic inequality among regencies and municipalities in Central Java from 2015 to 2023. Employing a quantitative approach, the analysis utilizes panel data regression with a fixed effects model and robust standard errors to address heteroskedasticity. The dataset comprises 315 observations across 35 regions over nine years. The independent variables include population size, open unemployment, average years of schooling, and the number of medium- and large-scale manufacturing industries. The results indicate that population size and open unemployment exert statistically significant effects on interregional economic inequality, whereas average years of schooling and industrial concentration do not exhibit such influence. These findings underscore the importance of employment-driven and spatially balanced development strategies, as well as long- term investment in educational infrastructure, to mitigate inequality and foster inclusive regional growth.