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Regional Skill Differentials: A Study Of The Indonesian Labor Market

Author

Listed:
  • TRI MULYANINGSIH

    (Department of Economics, Universitas Sebelas Maret, Surakarta, Indonesia)

  • RIYANA MIRANTI

    (Institute for Governance and Policy Analysis (IGPA), Faculty of Business, Government and Law, University of Canberra, ACT 2601, Australia)

  • ANNE DALY

    (Faculty of Business, Government and Law, University of Canberra, ACT 2601, Australia)

  • CHRIS MANNING

    (ANU College of Asia and the Pacific Arndt-Corden Department of Economics, Crawford School of Public Policy, Australian National University, ACT Acton 2601, Australia)

Abstract

This study investigates the patterns and trends in the returns to skill in the Indonesian labor market over the period 2007 to 2013, a period of rising earnings and income inequality. The study takes into account the labor demand and supply across regional development regions and over time. It presents evidence on the returns to skill related to structural changes in the economy through the growth of modern services and the resource boom. It confirms that skill premiums varied across regional development areas. The composition of industries across regions, female labor participation, the proportion of casual workers, the supply of tertiary-educated workers and factors unique to each region are all determinants of the regional skill premiums. The results support the policy focus on developing human capital in Indonesia to meet the rising demand for skilled workers and show the role of the manufacturing sector and minimum wages policy in reducing the skill premium.

Suggested Citation

  • Tri Mulyaningsih & Riyana Miranti & Anne Daly & Chris Manning, 2023. "Regional Skill Differentials: A Study Of The Indonesian Labor Market," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(03), pages 703-728, June.
    • Handle: RePEc:wsi:serxxx:v:68:y:2023:i:03:n:s0217590819500371
    DOI: 10.1142/S0217590819500371
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    More about this item

    Keywords

    Skill premium; supply of labor; demand of labor; regional development area; Indonesia; human capital;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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