Income Distribution in Islamic Economics: An Analysis of Inequality and the Role of Islamic Philanthropy

Abstract

This study aims to analyze the effect of zakat collection, zakat distribution, Gross Regional Domestic Product (GRDP), and the number of poor people on income distribution in Indonesia from an Islamic economic perspective. This study uses a quantitative approach with panel data regression methods, using data from 34 provinces in Indonesia during the period 2022–2024. The type of data used is secondary data sourced from the Central Statistics Agency (BPS) and the National Zakat Agency (BAZNAS). The analysis was conducted using EViews 13, through three model approaches, namely the Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM). The results of the Chow, Hausman, and Lagrange Multiplier tests show that the best model used is the Random Effect Model (REM). In addition, classical assumption tests were conducted to ensure the validity of the estimation results, namely the Multicollinearity test and the Heteroscedasticity test. The coefficient of determination (R²) value of 0.1909 indicates that the four independent variables explain 19.09% of the variation in income inequality. The results of the study confirm the importance of optimizing the zakat function in income distribution, as well as the need to strengthen the distribution mechanism so that the benefits of zakat are more evenly distributed in society