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

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Author Info

  • Daniel Suryadarma

    (SMERU)

  • 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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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Labor Economics Working Papers with number 22545.

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Date of creation: Jan 2005
Date of revision:
Handle: RePEc:eab:laborw:22545

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Related research

Keywords: discouraged workers; open unemployment; measurement; Indonesia;

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References

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  1. James Levinsohn & Steven Berry & Jed Friedman, 1999. "Impacts of the Indonesian Economic Crisis: Price Changes and the Poor," William Davidson Institute Working Papers Series 249, William Davidson Institute at the University of Michigan.
  2. 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.
  3. 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, 03.
  4. 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.
  5. Suryahadi, A. & Chen, P. & Tyers, R., 1999. "Openness, Technological Change and Labor Demand in Pre-Crisis Indonesia," Papers 377, Australian National University - Department of Economics.
  6. Stefano DellaVigna & M. Daniele Paserman, 2004. "Job Search and Impatience," NBER Working Papers 10837, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. 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 466252, International Labour Organization.
  2. 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.
  3. 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.
  4. Palmer, Susannah & Noriel, Carmelo C, 2008. "Freedom of association and collective bargaining : Indonesian experience 2003-2008," ILO Working Papers 427831, International Labour Organization.

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