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Wages, Employment and Economic Shocks: Evidence from Indonesia

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Author Info

  • Smith, J.P.
  • Thomas, D.
  • Frankenberg, E.
  • Beegle, K.

Abstract

After over a quarter century of sustained economic growth, Indonesia was struck by a large and unanticipated crisis at the end of the 20th century. Real GDP declined by about 12% in 1998. Using 13 years of annual labor force data in conjunction with two waves of a household panel, the Indonesia Family Life Survey (IFLS), this paper examines the impact of the crisis on labor market outcomes. Aggregate employment has remained remarkably robust through the crisis although there has been significant switching within sectors. The drama of the crisis lies not in aggregate employment but in real hourly earnings which, in one year, collapsed by around 40% for urban workers--be they males or females, in the market sector or self-employed. Declines of the same magnitude are recorded for females in the rural sector and rural males working for a wage. In stark contrast, real hourly earnings of self-employed males in rural areas have remained essentially stable.

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Bibliographic Info

Paper provided by RAND - Labor and Population Program in its series Papers with number 00-07.

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Length: 43 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:fth:randlp:00-07

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Postal: RAND, Labor and Population Program, 1700 Main Street, P.O. Box 2138 Santa Monica, CA 90407-2138.
Phone: (310) 393-0411, x7359
Fax: 310-393-4818
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Web page: http://www.rand.org/labor.html
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Related research

Keywords: WAGES ; HOUSEHOLDS ; SURVEYS ; ECONOMIC POLICY ; DEVELOPING COUNTRIES ; ECONOMIC CONDITIONS;

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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," NBER Working Papers 7194, National Bureau of Economic Research, Inc.
  2. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March.
  3. Steven Radelet & Jeffrey Sachs, 1998. "The Onset of the East Asian Financial Crisis," NBER Working Papers 6680, National Bureau of Economic Research, Inc.
  4. Elizabeth Frankenberg & James P. Smith & Duncan Thomas, 2003. "Economic Shocks, Wealth, and Welfare," Journal of Human Resources, University of Wisconsin Press, vol. 38(2).
  5. repec:fth:michin:446 is not listed on IDEAS
  6. Giancarlo Corsetti & Paolo Pesenti & Nouriel Roubini, 1998. "What Caused the Asian Currency and Financial Crisis? Part II: The Policy Debate," NBER Working Papers 6834, National Bureau of Economic Research, Inc.
  7. Giancarlo Corsetti & Paolo Pesenti & Nouriel Roubini, 1998. "What Caused the Asian Currency and Financial Crisis? Part I: A Macroeconomic Overview," NBER Working Papers 6833, National Bureau of Economic Research, Inc.
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