IDEAS home Printed from https://ideas.repec.org/a/idn/journl/v12y2009i2fp151-192.html
   My bibliography  Save this article

Strategy On Reducing Unemployment Persistence: A Micro Analysis In Indonesia

Author

Listed:
  • Mulyana Soekarni
  • Iman Sugema
  • Priyo R. Widodo

Abstract

This study has three main objectives namely: (1) examine the existence of the persistence of unemployment in Indonesia; (2) examine the factors that cause the persistence of unemployment in Indonesia and in some sample areas, and (3) formulate strategies and policy measures needed to reduce the level of unemployment. To achieve these objectives the activities we do is an empirical analysis through the modeling of Econometrics, unemployment accounting, and descriptive statistics. Meanwhile, the data used are secondary data and regional macroeconomic and primary data collected through interdownloads with workers, the unemployed, firms, bureaucrats, and unions. The study concludes that the persistence of unemployment in Indonesia is disequilibrium persistent unemployment without self correcting mechanism, which means that the persistence occurred outside the labor market equilibrium and has no automatic mechanism to get to the point of equilibrium. In addition, persistence is the result of the slow process of capital accumulation, wage rigidity, the length of job search, and the inertia caused by institutional factors of labor market. The main implication of this study are: (1) the need to improve the quality of growth through hands-on strategy; (2) banking policy and capital markets can lead to acceleration of capital accumulation; (3) monetary policy is more focused on inflation targeting, (4) increased total factor productivity; (5) special incentives for labor-intensive sectors; (6) strengthening vocational education, and (7) anti-unemployment programs that are regionally specific.

Suggested Citation

  • Mulyana Soekarni & Iman Sugema & Priyo R. Widodo, 2009. "Strategy On Reducing Unemployment Persistence: A Micro Analysis In Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 12(2), pages 151-192, October.
    • Handle: RePEc:idn:journl:v:12:y:2009:i:2f:p:151-192
    DOI: https://doi.org/10.21098/bemp.v12i2.370
    as

    Download full text from publisher

    File URL: https://bulletin.bmeb-bi.org/cgi/viewcontent.cgi?article=1369&context=bmeb
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.21098/bemp.v12i2.370?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. G. S. Maddala & Shaowen Wu, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 631-652, November.
    2. Jussi Tolvi, 2003. "Unemployment persistence of different labour force groups in Finland," Applied Economics Letters, Taylor & Francis Journals, vol. 10(8), pages 455-458.
    3. repec:bla:obuest:v:61:y:1999:i:0:p:631-52 is not listed on IDEAS
    4. Zhongmin Wu, 2003. "The persistence of regional unemployment: evidence from China," Applied Economics, Taylor & Francis Journals, vol. 35(12), pages 1417-1421.
    5. Song, Frank M & Wu, Yangru, 1997. "Hysteresis in Unemployment: Evidence from 48 U.S. States," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 235-243, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mulyana Soekarni & Iman Sugema & Priyo R. Widodo, 2009. "Persistensi Pengangguran Di Indonesia dan Upaya Penanggulangannya Berdasarkan Analisis Data Mikro," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 12(2), pages 151-192, October.
    2. Luis Alberiko Gil-Alana & Pedro Garcia-del-Barrio, 2006. "New Revelations about Unemployment Persistence in Spain," Faculty Working Papers 10/06, School of Economics and Business Administration, University of Navarra.
    3. Vuyokazi Pikoko & Andrew Phiri, 2019. "Is There Hysteresis in South African Unemployment? Evidence from the Post-Recessionary Period," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 15(3), pages 365-387, JUNE.
    4. Giorgio Canarella & Rangan Gupta & Stephen M. Miller & Stephen K. Pollard, 2019. "Unemployment rate hysteresis and the great recession: exploring the metropolitan evidence," Empirical Economics, Springer, vol. 56(1), pages 61-79, January.
    5. Jean françois Hoarau & Claude Lopez & Michel Paul, 2010. "Short Note on the Unemployment Rate of the “French overseas regions”," Economics Bulletin, AccessEcon, vol. 30(3), pages 2321-2329.
    6. De-Chih Liu, 2011. "Hysteresis Hypothesis in Job Creation and Destruction: Evidence from the U.S," Annals of Economics and Finance, Society for AEF, vol. 12(2), pages 389-409, November.
    7. Cheng, Ka Ming & Durmaz, Nazif & Kim, Hyeongwoo & Stern, Michael L., 2012. "Hysteresis vs. natural rate of US unemployment," Economic Modelling, Elsevier, vol. 29(2), pages 428-434.
    8. Tolga Omay & Muhammad Shahbaz & Chris Stewart, 2021. "Is there really hysteresis in the OECD unemployment rates? New evidence using a Fourier panel unit root test," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(4), pages 875-901, November.
    9. Roberto Patuelli & Norbert Schanne & Daniel A. Griffith & Peter Nijkamp, 2012. "Persistence Of Regional Unemployment: Application Of A Spatial Filtering Approach To Local Labor Markets In Germany," Journal of Regional Science, Wiley Blackwell, vol. 52(2), pages 300-323, May.
    10. Kåre Johansen, "undated". "Hysteresis in Unemployment: Evidence from Norwegian Counties," Working Paper Series 0602, Department of Economics, Norwegian University of Science and Technology, revised 20 Aug 2002.
    11. Qaiser Munir & Sook Ching Kok & Kasim Mansur, 2019. "External Shocks, Structural Breaks And Unemployment Hysteresis In Selected Asian Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(03), pages 575-600, June.
    12. Österholm, Pär, 2004. "Estimating the Relationship between Age Structure and GDP in the OECD Using Panel Cointegration Methods," Working Paper Series 2004:13, Uppsala University, Department of Economics.
    13. Par Osterholm, 2004. "Killing four unit root birds in the US economy with three panel unit root test stones," Applied Economics Letters, Taylor & Francis Journals, vol. 11(4), pages 213-216.
    14. Liew, Venus Khim-Sen & Chia, Ricky Chee-Jiun & Puah, Chin-Hong, 2009. "Does Hysteresis in Unemployment Occur in OECD Countries? Evidence from Parametric and Non-Parametric Panel Unit Roots Tests," MPRA Paper 9915, University Library of Munich, Germany.
    15. Jing-Ping Li & Omid Ranjbar & Tsangyao Chang, 2017. "Unemployment Hysteresis In Piigs Countries: A New Test With Both Sharp And Smooth Breaks," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(05), pages 1165-1177, December.
    16. Mohan, Ramesh & Kemegue, Francis & Sjuib, Fahlino, 2007. "Hysteresis in Unemployment: Panel Unit Roots Tests Using State Level Data," MPRA Paper 5580, University Library of Munich, Germany.
    17. Omay, Tolga & Shahbaz, Muhammad & Stewart, Chris, 2021. "Is There Really Hysteresis in OECD Countries’ Unemployment Rates? New Evidence Using a Fourier Panel Unit Root Test," MPRA Paper 107691, University Library of Munich, Germany, revised 10 May 2021.
    18. Cheng, Ka Ming, 2022. "Doubts on natural rate of unemployment: Evidence and policy implications," The Quarterly Review of Economics and Finance, Elsevier, vol. 86(C), pages 230-239.
    19. Bilal Mehmood & Syed Hassan Raza & Mahwish Rana & Huma Sohaib & Muhammad Azhar Khan, 2014. "Triangular Relationship between Energy Consumption, Price Index and National Income in Asian Countries: A Pooled Mean Group Approach in Presence of Structural Breaks," International Journal of Energy Economics and Policy, Econjournals, vol. 4(4), pages 610-620.
    20. Pedroni, Peter & Yao, James Yudong, 2006. "Regional income divergence in China," Journal of Asian Economics, Elsevier, vol. 17(2), pages 294-315, April.

    More about this item

    Keywords

    Persistent unemployment; Disequilibrium; Wage rigidity; Job search; Indonesia;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idn:journl:v:12:y:2009:i:2f:p:151-192. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lutzardo Tobing or Jimmy Kathon (email available below). General contact details of provider: https://edirc.repec.org/data/bigovid.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.