Skip to main navigation Skip to search Skip to main content

Structural Change and Formal Sector Employment Growth in Indonesia

Research output: Contribution to journal › Article › peer-review

Abstract

The study provides evidence on the transition and growth of the formal sector in the Indonesian economy. It utilizes data from the National Labour Force Survey (Sakernas) for tracking the previous work status of labourers as formal or informal workers. The study also examines the implications of formalization of employment for the different rates of earnings of formal sector workers, given their human capital characteristics and different industries of employment. The study finds that the growth of employment in the formal sector is mainly the result of the entry of younger and better educated workers. Although there is some mobility from the informal to the formal sector, the results show that individuals who were previously working in the informal sector are less likely to move to the formal sector. In terms of earnings, there is evidence of scarring effects: individuals who are initially in the formal sector earn more than individuals who are initially in the informal sector.

Original languageEnglish
Pages (from-to)1-20
Number of pages20
JournalJournal of Southeast Asian Economies
Volume39
Issue number1
DOIs
Publication statusPublished - Apr 2022

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

  1. SDG 8 - Decent Work and Economic Growth
    SDG 8 Decent Work and Economic Growth
  2. SDG 9 - Industry, Innovation, and Infrastructure
    SDG 9 Industry, Innovation, and Infrastructure
  3. SDG 10 - Reduced Inequalities
    SDG 10 Reduced Inequalities
  4. SDG 17 - Partnerships for the Goals
    SDG 17 Partnerships for the Goals

Keywords

  • earnings differentials
  • human capital
  • Indonesia
  • Informal sector
  • job mobility

Fingerprint

Dive into the research topics of 'Structural Change and Formal Sector Employment Growth in Indonesia'. Together they form a unique fingerprint.

Cite this