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REGIONAL LABOUR MARKETS DURING DEREGULATION IN INDONESIA Have the Outer Islands Been Left Behind?

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  • Chris Manning

Abstract

Indonesian labour markets have undergone a major transformation over the past 30 years, especially on Java since liberalisation gathered pace in the mid 1980s. The paper focuses on regional dimensions of these changes. In contrast to emerging interregional disparities in some other countries, it finds that employment structure has changed markedly and real wages risen in most Outer Island provinces since 1987. While wage growth has been more rapid in Java-Bali, labour in the Outer Island provinces has enjoyed large gains from rapid economic growth during the deregulation period. Among Outer Island provinces, Northern Sumatra and the poorer Eastern Island provinces have experienced substantial growth, while the Kalimantan provinces have lagged in manufacturing employment and wages. Labour market outcomes have also been less favourable in land abundant provinces which received large numbers of assisted migrants during the earlier oil boom period. It is concluded that export-led industrialisation concentrated in Java-Bali has contributed to labour market transformation and income growth outside Java-Bali. In addition, improvements in wages and the shift of labour outside agriculture have been supported by continuing government support for infrastructure and human resource development in the Outer Island provinces.

Suggested Citation

  • Chris Manning, 1996. "REGIONAL LABOUR MARKETS DURING DEREGULATION IN INDONESIA Have the Outer Islands Been Left Behind?," Departmental Working Papers 1996-12, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:1996-12
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    1. Hal Hill, 1997. "Regional development in Southeast Asia: The challenges of subnational diversity," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 2(3), pages 261-302.
    2. Hill, Hal, 1983. "Choice of Technique in the Indonesian Weaving Industry," Economic Development and Cultural Change, University of Chicago Press, vol. 31(2), pages 337-353, January.
    3. Jian, Tianlun & Sachs, Jeffrey D. & Warner, Andrew M., 1996. "Trends in regional inequality in China," China Economic Review, Elsevier, vol. 7(1), pages 1-21.
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    Cited by:

    1. Cox Edwards, Alejandra, 1996. "Labor regulations and industrial relations in Indonesia," Policy Research Working Paper Series 1640, The World Bank.

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