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Income Inequality between Formal-Informal Employees Based on Education Group

Author

Listed:
  • Riska Dwi Wulandari

    (Faculty of Economics and Business, Brawijaya University, Indonesia)

  • Susilo

    (Faculty of Economics and Business, Brawijaya University, Indonesia)

  • Dias Satria

    (Faculty of Economics and Business, Brawijaya University, Indonesia)

Abstract

Integrally, the informal sector deals with the formal sector with pro-cyclical nature or as a complementary sector. Such conditions allow for wage disparity between sectors even in the same education group. Thus, this study seeks to determine the determinants of wage inequality between formal and informal employees in skilled and unskilled workers in Indonesia in 2017 using Blinder-Oaxaca decomposition. The results showed that the discrimination factor had a greater influence than the endowment factor on wage inequality and the endowment factors that contributed to the increase in wage inequality between the two groups were age squared, experience, and job training.

Suggested Citation

  • Riska Dwi Wulandari & Susilo & Dias Satria, 2018. "Income Inequality between Formal-Informal Employees Based on Education Group," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 64, pages 25-42, Juni.
    • Handle: RePEc:lpe:efijnl:201802
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    References listed on IDEAS

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