Income inequality is a problem that is not only faced by developing countries such as Indonesia, but also developed countries. The difference lies in the proportion of an inequality that occurs and the solution to the level of difficulty experienced. Thus, this study aims to empirically analyze the unequal distribution of population income in Java island, Indonesia, by including the human development index, open unemployment rate, foreign investment, and the degree of fiscal decentralization. The research model used in this study was multiple linear regression to analyze the panel data with a fixed-effect model approach. The results of the study showed that human development index, open unemployment rate, and the degree of fiscal decentralization had a positive and significant effect on income inequality in Java island. Meanwhile, foreign investment had a negative and insignificant effect on income inequality in Java. It is because the value of the investment is more invested in the capital-intensive sector. The government is expected to be more selective in accepting foreign investments that enter the country, especially in Java, and it should be labor-intensive investments. In addition, the government has to equalize locations for foreign investment without reducing good cooperation with these foreign investors.

Abstract
1. Introduction
2. Research Methods
3. Results
    3.1. Causality Test
    3.2. Model Selection Test
    3.3. Panel Data Regression Testing Results
4. Discussion
    4.1. The Effect of Human Development Index onIncome Inequality
    4.2. The Effect of Open Unemployment Rate onIncome Inequality
    4.3. The Effect of Foreign Investment on IncomeInequality
    4.4. The Effect of Fiscal Decentralization Degreeon Income Inequality
5. Conclusion
References

• Nano PRAWOTO(Business and Economic Faculty, Universitas Muhamadiyah Yogyakarta) Corresponding Author.
• Richa Dwi CAHYANI(Business and Economic Faculty, Universitas Muhammadiyah Yogyakarta)