Has Zakat Reduced Disparity in Indonesia?

Abstract

This paper attempts to investigate the view of Tahir (1989) on Islamic microeconomic that zakat is subject to reduce inequality. In doing so, this work takes Indonesia as an object of the study and includes zakat, infaq, and shadaqah (ZIS) along with the macroeconomic variables with the observed period from 2015 to 2018 for the analysis. The data is gained from the related government agencies and is analyzed using regression. From this attempt, this paper introduces the best model to measure the relationship between ZIS collection and disparity reduction in Indonesia. This study by no means present any evidence to claim that the ZIS collected by the respective institution has contributed to reduce inequality in Indonesia. A possible explanation for this is that the ZIS distributed both under the consumptive and productive schemes has not transformed the mustahik into the middle income during the observed periods.