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Inequality of income in East Java is still considered high as indicated by the high value of the Gini ratio in most districts/cities. Local government capital expenditure is one of the triggers of the high disparity, in addition to the high per capita spending and open unemployment in East Java. Therefore, this study aims to analyze how influence the capital expenditure, per capita expenditure and unemployment rate have on inequality is implied in the gini coefficient.Quantitative analysis, explanatory method with panel data. The panel data selection process with data normality test through the estimation of common effect, fixed effect or random effect model parameters and the selection of the right model using panel data regression model which is processed using e-views software 10. The results show the level of income inequality of each district / the city has a moderate stage gap. The Gini index of regency/city in East Java is quite volatile, the highest value is Madiun City, Malang City, Blitar City, and Pasuruan City. Capital expenditure and per capita expenditure have insignificant effect on the gini ratio, while the open unemployment rate partially influences the gini ratio. Capital expenditure, per capita expenditure and unemployment rates together have a significant positive effect on the Gini ratio of districts/cities in East Java. Government capital expenditure is realized in the form of expenditure in the education sector, health sector expenditure, goods/services expenditure is no less important than infrastructure spending such as roads, bridges, airports, terminals, ports.