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Do minimum wages affect employment? Evidence from the manufacturing sector in Indonesia

Author

Listed:
  • Ximena Del Carpio
  • Ha Nguyen
  • Laura Pabon
  • Liang Wang

Abstract

This paper investigates the impact of minimum wages on employment and wages in Indonesian manufacturing firms between 1993 and 2006. It shows that within firms, the employment effects of minimum wage hikes is negative. It finds significant, negative employment effects of minimum wages among small firms and for non-production, less-educated and female workers. The paper also finds that minimum wages are more correlated with small firms’ average wages than large firms’, suggesting that minimum wages are more binding in small firms. Jel codes: J08, J16, J20, J31, L60 Copyright Del Carpio et al. 2015

Suggested Citation

  • Ximena Del Carpio & Ha Nguyen & Laura Pabon & Liang Wang, 2015. "Do minimum wages affect employment? Evidence from the manufacturing sector in Indonesia," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-30, December.
  • Handle: RePEc:spr:izaldv:v:4:y:2015:i:1:p:1-30:10.1186/s40175-015-0040-8
    DOI: 10.1186/s40175-015-0040-8
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    References listed on IDEAS

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    Cited by:

    1. Kyunghoon Kim & Andy Sumner & Arief Anshory Yusuf, 2018. "Is structural transformation-led economic growth immiserising or inclusive? The case of Indonesia," Departmental Working Papers 2018-11, The Australian National University, Arndt-Corden Department of Economics.
    2. McGuinness, Seamus & Redmond, Paul & Delaney, Judith, 2019. "The prevalence and effect on hours worked of the minimum wage in Ireland: A sectoral and regional analysis," Research Series, Economic and Social Research Institute (ESRI), number RS93.
    3. David Neumark & Luis Felipe Munguia Corella, 2019. "Do Minimum Wages Reduce Employment in Developing Countries? A Survey and Exploration of Conflicting Evidence," NBER Working Papers 26462, National Bureau of Economic Research, Inc.

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