On the re-assessment of inequality in Indonesia: household survey or national account?

This paper is motivated by the inconsistency between food and non-food expenditure estimated from household survey data (SUSENAS) and from nationalaccount (I-O table) and its connection on the issue of inequality in Indonesia.Since non-food expenditure tend to be under-estimated when compared withnational account data, it imply the under-representation of the rich in the cal-culation of inequality in Indonesia. This paper, then applies an approach toreconciling household survey and national accounts data, by re-estimating thesampling weight through minimization of entropy distance of information takinghousehold survey weight as prior, while satisfying some aggregation constraints.The estimated weight then is used to calculate standard indicator of inequalityin Indonesia. The results suggests that while inequality in rural Indonesia doesnot change much, due to possible under- representation of the rich in the survey, inequality in urban Indonesia is highly under-estimated. The "Jakarta factor"seems to account mostly to this discrepancy.