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The Measurement and Trends of Unemployment in Indonesia: The Issue of Discouraged Workers

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  • Daniel Suryadarma
  • Asep Suryahadi
  • Sudarno Sumarto

Abstract

This study provides an overview of the concepts used to measure unemployment in Indonesia and their consequences for the measured unemployment trends. One finding shows that BPSs decision in 2001 to relax the definition of labor force by including discouraged workers has resulted in an artificially high open unemployment rate and disguises the actual decline in traditionally-measured open unemployment rates post-crisis. Another finding indicates that discouraged workers in Indonesia are not confined only to the poor and those who are denied access to the proper job market. We recommend that, if Indonesia still wants to utilize a broader definition of the labor force, the measurement of open unemployment should adhere to the ILOs recommendation of only including those discouraged workers who are still willing to work. The discouraged workers who are unwilling to work should be left in the out of labor force category.
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Suggested Citation

  • Daniel Suryadarma & Asep Suryahadi & Sudarno Sumarto, "undated". "The Measurement and Trends of Unemployment in Indonesia: The Issue of Discouraged Workers," Working Papers 361, Communications Section.
    • Handle: RePEc:agg:wpaper:361
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    References listed on IDEAS

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    1. Stefano DellaVigna & M. Daniele Paserman, 2005. "Job Search and Impatience," Journal of Labor Economics, University of Chicago Press, vol. 23(3), pages 527-588, July.
    2. Suryahadi, A. & Chen, P. & Tyers, R., 1999. "Openness, Technological Change and Labor Demand in Pre-Crisis Indonesia," ANU Working Papers in Economics and Econometrics 1999-377, Australian National University, College of Business and Economics, School of Economics.
    3. Chris Manning & P. N. Junankar, 1998. "Choosy Youth or Unwanted Youth? A Survey of Unemployment," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(1), pages 55-93.
    4. Geeta G. Kingdon & John B. Knight, 2000. "Are searching and non-searching unemployment distinct states when unemployment is high? The case of South Africa," CSAE Working Paper Series 2000-02, Centre for the Study of African Economies, University of Oxford.
    5. James A. Levinsohn & Steven T. Berry & Jed Friedman, 2003. "Impacts of the Indonesian Economic Crisis.Price Changes and the Poor," NBER Chapters, in: Managing Currency Crises in Emerging Markets, pages 393-428, National Bureau of Economic Research, Inc.
    6. Chris Manning, 2000. "Labour Market Adjustment to Indonesia's Economic Crisis: Context, Trends and Implications," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(1), pages 105-136.
    7. Asep Suryahadi & Sudarno Sumarto, 2003. "Poverty and Vulnerability in Indonesia Before and After the Economic Crisis," Asian Economic Journal, East Asian Economic Association, vol. 17(1), pages 45-64, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Avdullah Hoti, 2017. "Participation, Discouraged Workers and Job Search: Evidence for Kosova," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 3(3), pages 239-262, July.
    2. Todor Todorov, 2012. "Hidden Unemployment in Bulgaria – Discouraged Worker Effect and Involuntary Underemployment," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 171-199.
    3. Armida Alisjahbana & Chris Manning, 2006. "Labour market dimensions of poverty in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 42(2), pages 235-261.
    4. Matsumoto, Makiko. & Verick, Sher., 2011. "Employment trends in Indonesia over 1996-2009 : casualization of the labour market during an era of crises, reforms and recovery," ILO Working Papers 994662523402676, International Labour Organization.
    5. Palmer, Susannah. & Noriel, Carmelo C., 2008. "Freedom of association and collective bargaining : Indonesian experience 2003-2008," ILO Working Papers 994278313402676, International Labour Organization.
    6. repec:ilo:ilowps:466252 is not listed on IDEAS
    7. repec:ilo:ilowps:427831 is not listed on IDEAS

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    More about this item

    Keywords

    discouraged workers; open unemployment; measurement; Indonesia;
    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
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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