Yogyakarta as a parameter for the development of national education offers potential young and educated human resources. It is hoped that this potential will trigger youth’s productivity to contribute in the demographic bonus and national development. From the perspective of economic growth, Yogyakarta tends to have an increasing trend when compared to that of national economy which tends to decline. However, the increasing trend can become a problem when the educated youth are unproductive and fails to transition from education field to working field. The data of Yogyakarta’s GDRP from 2003 to 2013 shows a dependency on the trading, tourism and services sectors. Optimism towards those three sectors do show a percentage increase, but it is not in sync with the education potential and employment for the youth. There is a transition from young labour who are self- or family-employed into low-rank employees and paid labor. There are at least two effects of this phenomenon. First, the data shows that the number of unemployed youth become stagnant with high school as the highest completed education. This indicates a hindrance for transition among youth from secondary education to higher education. Second, this obstacle prevents youth from moving into a higher income bracket and traps them in below-average wages. In reality, economic growth is still reliant on the services and consumption sectors, thus a transitory approach is needed that can involve the youth not as an object but as a main feature of  Special Region of Yogyakarta is needed.

Introduction/Main Objectives: This study discusses the three main aspects of inequality: the level of education attained, urban-rural area, and gender. Background Problems: Inequality is one of the fundamental economic problems in Indonesia that has the potential to cause the non-optimal distribution of resources, economic instability, and may even lead to an economic crisis. Novelty: This study provide a new perspective on the differences in findings for the aspects of gender, education, and geographic factors on income inequality Research Methods: This study uses the Theil index for decomposition analysis and quantile regression analysis to analyze each class of income, particularly in the context of income inequality factors. Finding/Results: The findings show that, male workers in the lower class have a greater income than female workers. In addition, workers with an elementary school level experience higher inequality than workers with other levels of education do. Moreover, higher inequality occurs for urban workers in both the upper and lower classes, compared to workers in rural areas. From quantile regression analysis, the results show that, income inequality between men and women is reducing. The number of completed years has less influence compared to that in earlier periods, because more and more people enter education to increase their income. Lastly, urban workers have different incomes from rural workers, though the gap is reducing. It means both urban and rural workers have greater opportunities to earn a better income. Conclusion: Gender plays an important role in income inequality. The length of education has constantly affected income inequality as well. In the context of the area, urban workers normally have higher incomes.

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