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Wages, Employment and Economic Shocks: Evidence from Indonesia

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Author Info
James P. Smith
Duncan Thomas
Elizabeth Frankenberg
Kathleen Beegle

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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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Publisher Info
Paper provided by RAND Corporation Publications Department in its series Working Papers with number 00-07.

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Length: 43 pages
Date of creation: 2000
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Handle: RePEc:ran:wpaper:00-07

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

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Find related papers by JEL classification:
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
D30 - Microeconomics - - Distribution - - - General
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Elizabeth Frankenberg & James P. Smith & Duncan Thomas, 2004. "Economic Shocks, Wealth and Welfare," Labor and Demography 0403030, EconWPA. [Downloadable!]
    Other versions:
  2. 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. [Downloadable!] (restricted)
    Other versions:
  3. 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. [Downloadable!] (restricted)
  4. Steven Radelet & Jeffrey Sachs, 1998. "The Onset of the East Asian Financial Crisis," NBER Working Papers 6680, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David Cook & Hiromi Nosaka, 2005. "Dual labor markets and business cycles," Working Paper Series 2006-36, Federal Reserve Bank of San Francisco. [Downloadable!]
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  2. Robert E. B. Lucas, 2000. "The Effects of Proximity and Transportation on Developing Country Population Migrations," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-111, Boston University - Department of Economics. [Downloadable!]
  3. TAMURA Sakuya & SAWADA Yasuyuki, 2009. "Consumption Insurance against Unforeseen Epidemics:The Case of Avian Influenza in Vietnam," Discussion papers 09023, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  4. Menno Pradhan & Fadia Saadah & Robert Sparrow, 2003. "Did the Healthcard Program ensure Access to Medical Care for the Poor during Indonesia's Economic Crisis?," Tinbergen Institute Discussion Papers 03-016/2, Tinbergen Institute. [Downloadable!]
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  5. Iturriza, Ana & Bedi, Arjun S. & Sparrow, Robert, 2008. "Unemployment Assistance and Transition to Employment in Argentina," IZA Discussion Papers 3579, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Pinelopi Koujianou Goldberg & Nina Pavcnik, 2007. "Distributional Effects of Globalization in Developing Countries," NBER Working Papers 12885, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Thomas W. Hertel, 2006. "A Survey of Findings on the Poverty Impacts of Agricultural Trade Liberalization," The Electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization of the United Nations, vol. 3(1), pages 1-26. [Downloadable!]
  8. Tomohiro Machikita, 2005. "Career Crisis? The Impacts of Financial Shock on Entry-Level Labour Market: Experimental Evidences from Thailand in 1997," Hi-Stat Discussion Paper Series d04-79, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  9. Armida Alisjahbana & Chris Manning, 2006. "Labour market dimensions of poverty in Indonesia," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 42(2), pages 235-261, August. [Downloadable!] (restricted)
  10. Emmanuel Skoufias & Susan Parker, 2006. "Job loss and family adjustments in work and schooling during the Mexican peso crisis," Journal of Population Economics, Springer, vol. 19(1), pages 163-181, February. [Downloadable!] (restricted)
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