Educational Expansion and Inequality in Indonesia: Testing the Kuznets Hypothesis with Provincial Panel Data

This study analyzes the relationship between the level of educational attainment, educational inequality and expenditure inequality in Indonesia based on a provincial panel data set from 1996-2011 and attempts to test the Kuznets hypothesis for educational expansion. We found that educational inequality decreases as the average level of educational attainment increases. In contrast, expenditure inequality follows an inverted U-shaped pattern with respect to educational expansion and reaches the maximum at around 9-10 years of education. Given the current average educational level, further educational expansion would increase expenditure inequality. However, more equal distribution of education has an equalizing effect.