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Employment Absorption: Elasticity in the Industry and Services Sector in Indonesia

Author

Listed:
  • Dio Caisar DARMA

    (Sekolah Tinggi Ilmu Ekonomi Samarinda, Department of Management, Indonesia)

  • Jati KASUMA

    (University Teknologi MARA Malaysia (Sarawak Campus), Faculty of Business Management, Malaysia)

  • Muhammad IKBAL

    (Mulawarman University, Faculty of Economics and Business, Department of Accounting, Indonesia)

Abstract

Increased economic development in the industrial and service sectors is a component that is expected to be able to contribute significantly to the Indonesian economy. The research objective is to compare the number of absorbed workforces and employment elasticity in the industrial and service sectors in Indonesia. Variables used in this study consist of the variable influence of labor and GDP on production units, in this case, the industrial sector and the service sector which can later compare elasticities employment opportunities in the industrial and service sectors. In this study, the type of data used is secondary data from 2010-2019. The analytical tool used is a two-step structural model and analyzed using SPSS. From the results of the analysis, it was found that the elasticity of employment in the industrial sector is positive inelastic. The elasticity of employment in the service sector is positive inelastic. The elasticity of employment in the service sector is greater than the elasticity of employment in the industrial sector in Indonesia.

Suggested Citation

  • Dio Caisar DARMA & Jati KASUMA & Muhammad IKBAL, 2020. "Employment Absorption: Elasticity in the Industry and Services Sector in Indonesia," Management and Economics Review, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 5(1), pages 125-135, June.
    • Handle: RePEc:rom:merase:v:5:y:2020:i:1:p:125-135
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    File URL: https://mer.ase.ro/files/2020-1/5-10.pdf
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    References listed on IDEAS

    as
    1. Chinhui Juhn & Simon Potter, 2006. "Changes in Labor Force Participation in the United States," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 27-46, Summer.
    2. David H. Autor & Mark G. Duggan, 2003. "The Rise in the Disability Rolls and the Decline in Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 157-206.
    3. Shi-hong Zeng & Jie-chang Xia, 2016. "Why rapid urbanization process cannot improve employment absorption capacity of service industry in China—also on the interactive mode innovation between service industry development with urbanization," China Finance and Economic Review, Springer, vol. 4(1), pages 1-12, December.
    4. Aurora Indra Putri, 2012. "Employment absorption in manufacturing industry: Yogyakarta case," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 4(2), pages 199-209, April.
    5. Dian Wahyuningsih & Ani Yunaningsih & Muhammad Sidik Priadana & Dio Caisar Darma & Purwadi Purwadi, 2020. "Why are Unemployment and Poverty Still Happening in Borneo Island, Indonesia?," International Journal of Economics and Financial Issues, Econjournals, vol. 10(2), pages 235-241.
    6. Thomas Habanabakize & Daniel Francois Meyer & Judit Oláh, 2019. "The Impact of Productivity, Investment and Real Wages on Employment Absorption Rate in South Africa," Social Sciences, MDPI, vol. 8(12), pages 1-15, December.
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    Cited by:

    1. Muhammad Awaluddin & Fitriadi Fitriadi & Arfiah Busari & Dio Caisar Darma, 2021. "Contemporary Indonesian GDP: Context of Analysis at Unemployment, Labor Force and Poor People," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 7(4), pages 143-154, 12-2021.

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    More about this item

    Keywords

    economic growth; employment; GDP; industrial sector; service sector.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • L7 - Industrial Organization - - Industry Studies: Primary Products and Construction
    • L89 - Industrial Organization - - Industry Studies: Services - - - Other

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