Energy Price Shocks, Motorisation Intensity, and Income Inequality with Panel Evidence from 34 Indonesian Provinces 2016–2025

Prananta, Andhika Taufan

Jurnal Kebijakan Ekonomi

This study investigates how fuel-price shocks and motorisation intensity affect income inequality across 34 Indonesian provinces (2016–2025). Using Random Effects, DiD, Synthetic Control, and Local Projections, we find energy shocks amplify inequality-exacerbating effects of motorisation in high-density provinces. Using a vehicle-density-based treatment indicator, the DiD estimate yields a conditional ATT of 0.39 percentage points (p = 0.442) as suggestive evidence. Impulse-response functions project a transitory Gini increase of up to 0.012 under extreme scenarios, reverting within 3–4 years. Our regional typology identifies eight resilient and six critically vulnerable provinces, providing a foundation for targeted policy interventions.