The Effect of Capital Expenditure, Financial Assistance Expenditure, and Per Capita Expenditure on Income Inequality in West Kalimantan

Abstract

This study aims to analyze the effects of capital expenditure, financial assistance expenditure, and per capita expenditure on income inequality in West Kalimantan. This study employs a quantitative approach using panel data regression analysis. The data used are secondary data covering 12 regencies/cities in West Kalimantan during the 2015–2024 period. The results indicate that capital expenditure has a negative and significant effect on income inequality, suggesting that an increase in capital expenditure tends to be associated with a decrease in income inequality. In contrast, financial assistance expenditure has a positive and significant effect on income inequality, indicating that an increase in financial assistance expenditure during the study period tends to be associated with greater income inequality. Per capita expenditure also has a negative and significant effect on income inequality, implying that higher levels of household expenditure tend to be associated with lower income inequality. Simultaneously, the three independent variables have a significant effect on income inequality. The research model explains approximately 56.74 percent of the variation in income inequality, while the remaining variation is influenced by other factors outside the model. These findings suggest that efforts to reduce income inequality in West Kalimantan should be supported by improving the effectiveness and equitable allocation of capital expenditure, evaluating the distribution and utilization of financial assistance expenditure, and implementing policies aimed at strengthening household purchasing power more evenly.