Effect of Economic Base and Growth on Income Distribution in West Sumatra

Abstract

This article reveals two research problems, namely: (1) The effect of economic basis on economic growth; (2) The effect of sector economic basis and economic growth on income distribution in West Sumatra. This is expost-facto research using panel data on sixteen districts/cities in West Sumatra for period of 2011-2015.Data were analyzed using panel regression (polled regression analysis). It was used statistical analysis of Chow Test and Hausmant test to determine model compatibility with existing data. The results of Chow Test and Hausmant Test show that the existing data are random effect, and then the analysis was continued with polled regression model without the requirement of classical assumptions. The results show that: (1). There is a very significant effect of economic basis on the economic growth; (2). There is a significant effect of economic basis and economic growth on income distribution. It proves that the economic basis owned by the districts/cities in West Sumatra is able to drive regional economic growth through income multiplier effect. Factually, it can be explained that the districts/cities having economic basis in more than three sectors of economic tend to have relatively higher economic growth, and then the districts/cities having more than three sectors of basis economic and higher economic growth tend to have more equitable income distribution and vice versa.