•  
  •  
 

Abstract

The effectiveness of minimum wages is still debated, even though minimum wage regulation increases worker’s wages, yet it causes “disemployment effect”. This study aims to identify differences in minimum wages impact on probabilities out of formal sector for unskilled and skilled workers. The type of skill used is based on job classification. Using Sakernas data in August 2010 and 2015, probit regression was conducted to estimate minimum wages impact on probabilities out of formal sector on skilled and unskilled workers. Based on analysis, minimum wage on probability of exit from formal sector is higher for unskilled workers than skilled workers.

Bahasa Abstract

Efektivitas penerapan upah minimum masih diperdebatkan, karena meskipun upah minimum meningkatkan upah pekerja, namun di sisi lain dapat menyebabkan “disemployment effect”. Penelitian ini bertujuan mengidentifikasi perbedaan dampak upah minimum terhadap probabilitas keluar dari sektor formal pada tenaga kerja tidak terampil dan terampil. Tipe keterampilan yang digunakan dalam penelitian ini berdasarkan klasifikasi jenis pekerjaan. Dengan menggunakan data Sakernas Agustus 2010 dan 2015, penelitian ini menggunakan regresi probit untuk mengestimasi dampak upah minimum terhadap probabilitas keluar dari sektor formal pada tenaga kerja terampil dan tidak terampil. Hasil yang diperoleh adalah dampak upah minimum terhadap probabilitas keluar dari sektor formal lebih tinggi pada tenaga kerja tidak terampil dibandingkan tenaga kerja terampil.

References

[1] Borjas, G. J. (2013). Labor Economics (6th edition). New York: McGraw-Hill.

[2] BPS. (2016). Indikator Pasar Tenaga Kerja Indonesia [Februari dan Agustus 2016]. Badan Pusat Statistik. Jakarta.

[3] Brochu, P., & Green, D. A. (2013). The impact of minimum wages on labour market transitions. The Economic Journal, 123(573), 1203–1235. doi: https://doi.org/10.1111/ecoj.12032.

[4] Brown, C., Gilroy, C., & Kohen, A. (1982). The effect of the minimum wage on employment and unemployment. Journal of Economic Literature, 20(2), 487–528.

[5] Cahuc, P., & Michel, P. (1996). Minimum wage unemployment and growth. European Economic Review, 40(7), 1463– 1482. doi: https://doi.org/10.1016/0014-2921(95)00035-6.

[6] Campolieti, M., Fang, T., & Gunderson, M. (2005). Minimum wage impacts on youth employment transitions, 1993–1999. Canadian Journal of Economics /Revue canadienne d’economique, 38(1), 81–104. doi: https://doi.org/10.1111/j.0008-4085.2005.00270.x.

[7] Card, D., & Krueger, A. B. (2000). Minimum wages and employment: a case study of the fast-food industry in New Jersey and Pennsylvania: reply. American Economic Review, 90(5), 1397–1420. doi: 10.1257/aer.90.5.1397.

[8] Chun, N., & Khor, N. (2010). Minimum wages and changing wage inequality in Indonesia. ADB Economics Working Paper Series, 196. Diakses 28 Oktober 2017 dari https://www.adb.org/publications/ minimum-wages-and-changing-wage-inequality-indonesia.

[9] Comola, M., & de Mello, L. (2009). How does decentralised minimum-wage setting affect unemployment and informality? The case of Indonesia. OECD Economic Department Working Papers, 710. Organisation for Economic Cooperation and Development. doi: https: //doi.org/10.1787/222850046464.

[10] Currie, J., & Fallick, B. C. (1996). The minimum wage and the employment of youth evidence from NLSY. The Journal of Human Resources, 31(2), 404–428. doi: 10.2307/146069.

[11] Del Carpio, X., Nguyen, H., Pabon, L., & Wang, L. C. (2015). Do minimum wages affect employment? Evidence from the manufacturing sector in Indonesia. IZA Journal of Labor & Development, 4(17). doi: https://doi.org/10.1186/s40175- 015-0040-8.

[12] Dickens, R., Machin, S., & Manning, A. (1999). The effects of minimum wages on employment: Theory and evidence from Britain. Journal of Labor Economics, 17(1), 1–22. doi: https://doi.org/10.1086/209911.

[13] Dong, S. X. (2016). Consistency between Sakernas and the IFLS for analyses of Indonesia’s labour market: A cross-validation exercise. Bulletin of Indonesian Economic Studies, 52(3), 343–378. doi: https: //doi.org/10.1080/00074918.2016.1228828.

[14] Ehrenberg, R. G., & Smith, R. S. (2012). Modern labor economics: Theory and public policy (11th edition). Prentice Hall.

[15] Gindling, T. H., & Terrell, K. (2005). The effect of minimum wages on actual wages in formal and informal sectors in Costa Rica. World Development, 33(11), 1905–1921. doi: https://doi.org/10.1016/j.worlddev.2005.04.017

[16] Gramlich, E. M. (1976). Impact of MinimumWages on Other Wages, Employment, and Family Incomes. Brookings Paper on Economic Activity, 2, 409–461. doi: 10.2307/2534380.

[17] Gujarati, D.N. (2003). Basic Econometrics (4th edition). New York: McGraw-Hill.

[18] Hessels, J., Arampatzi, E., van der Zwan, P., & Burger, M. (2018). Life satisfaction and self-employment in different types of occupations. Applied Economics Letters, 25(11), 734– 740. doi: https://doi.org/10.1080/13504851.2017.1361003.

[19] Hohberg, M., & Lay, J. (2015). The impact of minimum wages on informal and formal labor market outcomes: evidence fromIndonesia. IZA Journal of Labor&Development, 4(14). doi: https://doi.org/10.1186/s40175-015-0036-4.

[20] Lang, K., & Kahn, S. (1998). The effect of minimum wage laws on the distribution of employment: theory and evidence. Journal of Public Economics, 69(1), 67–82. doi: https://doi.org/10.1016/S0047-2727(97)00085-6.

[21] Machin, S., & Manning, A. (1994). The effects of minimum wages on wage dispersion and employment: Evidence from the UK Wages Councils. ILR Review, 47(2), 319–329. doi: https://doi.org/10.1177%2F001979399404700210.

[22] Magruder, J. R. (2013). Can minimum wages cause a big push? Evidence from Indonesia. Journal of Development Economics, 100(1), 48–62. doi: https: //doi.org/10.1016/j.jdeveco.2012.07.003.

[23] Neumark, D., Schweitzer, M., & Wascher, W. (2004). Minimum wage effects throughout the wage distribution. The Journal of Human Resources, 39(2), 425–450. doi: 10.3368/jhr.XXXIX.2.425.

[24] Pratomo, D. (2011). The effects of changes in minimum wage on employment in Indonesia: Regional panel data analysis. International Research Journal of Finance and Economics, 62(2), 15–27.

[25] SMERU. (2001). Wage and employment effects of minimum wage policy in the Indonesian urban labor market. SMERU Research Report. The SMERU Research Institut. Diakses 23 Oktober 2017 dari http://smeru.or.id/en/content/ wage-and-employment-effects-minimum-wage-policyindonesian- urban-labor-market.

[26] Soares, F. V. (2005). Minimum wage hikes and Employment Transitions in Brazil. Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33rd Brazilian Economics Meeting] 164, ANPEC - Associacao Nacional dos Centros de Pos-Graduacao em Economia [Brazilian Association of Graduate Programs in Economics]. Diakses 23 Oktober 2017 dari http://www.anpec.org.br/encontro2005/artigos/ A05A164.pdf.

[27] Stewart, M. B. (2004). The impact of the introduction of the U.K. minimum wage on the employment probabilities of low-wage workers. Journal of the European Economic Association, 2(1), 67–97. doi: https: //doi.org/10.1162/154247604323015481.

[28] Ulyssea, G. (2010). Regulation of entry, labor market institutions and the informal sector. Journal of Development Economics, 91(1), 87–99. doi: https: //doi.org/10.1016/j.jdeveco.2009.07.001.

[29] Welch, F. (1973). Minimum wage legislation in United States. RAND Paper Series, P-5145. RAND Corporation. Diakses 14 Oktober 2017 dari https://www.rand.org/pubs/papers/ P5145.html.

[30] Yuen, T. (2003). The effect of minimum wages on youth employment in Canada:Apanel study. The Journal of Human Resources, 38(3), 647–672. doi: 10.3368/jhr.XXXVIII.3.647.

Download

Included in

Economics Commons

Share

COinS
 
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.