JDE (Journal of Developing Economies) Vol.7 No.2 (2022): 266-279 JDE (Journal of Developing Economies) https://e-journal.unair.ac.id/JDE/index DETERMINANTS OF INCOME INEQUALITY VILLAGES AND CITIES IN INDONESIA Wike Juniat* 1 Muhammad Latf Abdullah 2 Muhammad Ghafur Wibowo 3 1,2,3 Faculty of Islamic Economics and Business, UIN Sunan Kalijaga Yogyakarta, Indonesia ABSTRACT The image of development in Indonesia is getng worse when development progress is felt by the upper class. The segmentaton of the upper and lower levels of society is refected in the gap between life in the village and the city. The purpose of this study is to analyze the determinants of income inequality based on the classifcaton of villages, cites, and between villages and cites in Indonesia. The data analysis method used is panel data regression which is an analytcal technique that is observed over a certain period. The data used is annual secondary data from 2016-2020 in 34 provinces of Indonesia. Inequality analysis is carried out by calculatng the Gini index based on household expenditure data. Economic growth, populaton, human development index, domestc investment, technology development index, and employment opportunites are independent variables. The results of this study found that there was a signifcant negatve relatonship the technology development index and positve relatonship populaton in city and between village and city areas. Then the variable employment opportunity have a signifcant negatve relatonship to income inequality in the village. Keywords: Income Inequality, Natonal Development, Rural and Urban Inequality. JEL: D63; O10; O18. To cite this document: Juniat, W., Abdullah, M. L., & Wibowo, M. G. (2022). Determinants of Income Inequality Villages and Cites in Indonesia. JDE (Journal of Developing Economies), 7(2), 266-279. Introducton Indonesia as a developing country has a level of inequality that shows stagnaton in several periods. In the last fve years, it was noted that Indonesia had an inequality level ranging from 0.38. In 2015, Indonesia had a level of inequality that touched 0.42 (fgure 1). The Gini index, which once touched the number 0.42, indicates that the level of inequality in Indonesia is high. In the scope of Southeast Asia and even the world, Indonesia is also a developing country with the highest level of inequality (World Bank, 2015). Income inequality between rich and poor groups can be an indicator of the cause of income inequality in Indonesia (Suryahadi et al., 2012; Verianto et al., 2022). The occurrence of diferences in income levels between individuals is caused by the quality of the human development index and diferences in capital control (Yusuf et al., 2014). The increase in welfare felt by the rich group is inversely proportonal to the welfare of the poor group due ARTICLE INFO Received: February 26th, 2022 Revision: May 31st, 2022 Accepted: November 3rd, 2022 Online: December 6th, 2022 *Correspondence: Wike Juniat E-mail: wikejuniat6@gmail.com JDE (Journal of Developing Economies) p-ISSN: 2541-1012; e-ISSN: 2528-2018 DOI: 10.20473/jde.v7i2.33980 Copyright: © 2022 by the authors. Submited for possible open access publicaton under the terms and conditons of the Creatve Commons Atributon 4.0 internatonal (CC BY) licence