THE EFFECT OF MINIMUM WAGES ON EMPLOYMENT IN INDONESIA
Abstract
Minimum wages have been a major consideration in Indonesia in recent years, as the government has strongly pursued a minimum wage policy. The levels of regional minimum wages have been increased significantly since 1989, and there is a concern that these increases may have slowed employment growth. Therefore, the purpose of this study is to examine the employment effects of minimum wages, using data for 26 provinces, covering the period from 1988 to 1999. The study focuses on different groups of workers within the urban formal sector. The results of graphical and statistical analysis indicate some support for the conventional theory of the negative employment effects of minimum wages.
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References
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Bank Indonesia (Central Bank of Republic of Indonesia), 2002, “Inflation Report”, [Homepage of Bank Indonesia], [Online], Available: http://www.bi.go.id/bank_ indonesia _ english/ monetary/inflation/, [2002, 10 February].
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Beth, M.J., 2001 (a), “Asia’s New Leaders: Indonesia Labour Leader Forges Ahead”, Far Eastern Economic Review (FEER), 8 March 2001.
________, 2001 (b), “Lost Labour, Lost Reform”, Far Eastern Economic Review (FEER), 15 March 2001.
Biro Pusat Statistik Indonesia (Indonesian Central Bureau of Statistics), 1997(a), Labourer/ Employees Situation in Indonesia August 1997, Cat. No. 3404, Jakarta
_____________________________________________________________, 1997(b), Labour Force Situation in Indonesia 1997, Cat. No. 3402, BPS, Jakarta
_____________________________________________________________, 1997(c), Statistic Wages 1997, Cat. No. 3407, BPS, Jakarta
_____________________________________________________________, 1998(a), Labourer/ Employees Situation in Indonesia August 1998, Cat. No. 3404, Jakarta
_____________________________________________________________, 1998(b), Labour Force Situation in Indonesia 1998, Cat. No. 3402, BPS, Jakarta
_____________________________________________________________, 1998(c), Statistic Wages 1998, Cat. No. 3407, BPS, Jakarta
_____________________________________________________________, 1999(a), Labourer/ Employees Situation in Indonesia August 1999, Cat. No. 3404, Jakarta
_____________________________________________________________, 1999(b), Labour Force Situation in Indonesia 1999, Cat. No. 3402, BPS, Jakarta
_____________________________________________________________, 1999(c), Statistic Wages 1999, Cat. No. 3407, BPS, Jakarta
_____________________________________________________________, 2000(a), Labourer/ Employees Situation in Indonesia August 2000, Cat. No. 3404, Jakarta
_____________________________________________________________, 2000(b), Labour Force Situation in Indonesia 2000, Cat. No. 3402, BPS, Jakarta
_____________________________________________________________, 2000(c), Statistic Wages 2000, Cat. No. 3407, BPS, Jakarta
_______________________________________________________, 2002, “Employment Statistics”, [Homepage of Indonesian Central Bureau of Statistics], [Online], Available: http://www.bps.go.id/statbysector/employ/, [2002, 21 February].
Booth, A., 1999, “The Social Impact of The Asian Crisis: What Do We Know Two Years On?”, in Asia Pacific Economic Literature, v.13(2), pp. 16-29.
Brown, C., Gilroy, C., and Kohen, A., 1982, “The Effect of the Minimum Wage on Employment and Unemployment”, in Journal of Economic Literature, v. 20, June, pp. 487-528.
Cameron, L., 1999, “Survey of Recent Economic Development”, in Bulletin of Indonesian Economic Studies, v. 35(1), pp. 3-40.
Card, D. and Krueger, A., 1994, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania.” in American Economic Review, v. 84, pp. 772-793.
_____________________, 1995, Myth and Measurement: The New Economics of the Minimum Wage, Princeton University Press, Princeton, New Jersey.
Deere, D., Murphy, K.M., Welch, F., 1995, “Employment and the 1990-1991 Minimum-WageHike (in Reexamining Methods of Estimating Minimum-Wage Effects)”, in American Economic Review, v. 85(2), pp. 232-237.
Fleisher, B.M. and Kniesner, T.J., 1984, Labor Economics: Theory, Evidence, and Policy, Prentice-Hall, New Jersey.
Ford, M., 1999, “Testing the Limits of Corporatism: Industrial Relations in Suharto’s Indonesia,” in Journal of Industrial Relations , v. 41(3), pp. 372-392.
Gall, G., 1998, “The Development of the Indonesian Labour Movement”, in The International Journal of Human Resource Management, v. 9(2), pp. 359-376.
Garcia, G.J. and Soelistianingsih, L., 1998, “Why Do Differences in Provincial Incomes Persist in Indonesia?”, in Bulletin of Indonesian Economic Studies, v. 34(1), pp. 95-120.
Ghellab, Y., 1998, “Minimum Wages and Youth Unemployment”, in Employment and Training Papers 26, International Labour Office, Employment and Training Department.
Hadiz, V., 2000, “Globalisation, Labour and The State: The Case of Indonesia”, in Asia Pacific Business Review, v. 6(2&3), pp. 239-259.
Hess, M., 1990, “Industrial Relations and Developing Economies”, in Discussion Paper no. 18 Department of Industrial Relations, University of Western Australia, Nedlands, WA.
________, 1997, “Understanding Indonesian Industrial Relations”, in The Journal of Industrial Relations, v. 39(1), pp.33-51.
Hill, H., 1996, The Indonesian Economy Since 1966: Southeast Asia’s Emerging Giant, Cambridge University Press, Melbourne.
Inkiriwang, R., 2001, “Menyongsong UMR 2002 Sulut” (Welcoming the 2002 Regional Minimum Wages in North Sulawesi), [Homepage of Menado Post], [Online], Available: http://www.mdopost.net/november2001/12-opini/21/01.html, [2001, 30 November].
International Labour Organisation (ILO), 2002, “The Labour Statistics Database”, [Homepage of Laborsta], [Online], Available: http://laborsta.ilo.org, [2002, 22 February].
Kearl, J.R., Pope, C.L., Whitting, G.C. and Wimmer, Larry T., 1979, “What Economists Think: A Confusion of Economists?” in American Economic Review, v. 69, pp. 28-37.
KOMPAS, 12 April 2000, “Ribuan Guru Unjuk Rasa di Istana Negara”, (Thousands of Teachers Went on Strike to State Palace),[Homepage of KOMPAS], [Online], Available: http://www.kompas.com/berita%2Dterbaru/0004/12/headline/09.htm, [20 December 2001].
Lambert, R., 1993, “Authoritarian State Unionism in New Order Indonesia”, in Asia Research Centre, Working Paper no. 25.
Mankiw, G., 1997, Macroeconomics, Worth Publishers, New York.
Manning, C., 1993, “Structural Change and Industrial Relations During The Soeharto Period: An Approaching Crisis?”, in Bulletin of Indonesian Economic Studies, v. 29(2), pp. 59-95.
Published
2003-10-11
How to Cite
Sukatrilaksana, L. (2003). THE EFFECT OF MINIMUM WAGES ON EMPLOYMENT IN INDONESIA. Buletin Ekonomi Moneter Dan Perbankan, 5(3), 74-121. https://doi.org/10.21098/bemp.v5i3.314
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Buletin Ekonomi Moneter dan Perbankan / Bulletin of Monetary Economics and Banking is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
