IDEAS home Printed from https://ideas.repec.org/p/hhs/eijswp/0169.html
   My bibliography  Save this paper

Do Education Earnings Differentials Reflect Productivity?: Evidence From Indonesian Manufacturing 1996

Author

Listed:
  • Takii, Sadayuki

    () (The International Centre for the Study of East Asian Development)

Abstract

The purpose of this paper is to examine the efficiency of labor markets for workers with different levels of educational achievement in Indonesian manufacturing plants in 1996. Specifically, the paper asks (1) are earnings for more educated workers higher than for less educated workers, and (2) do earnings differentials between more educated workers and less educated workers reflect corresponding productivity differentials? The empirical findings suggest that more educated production workers earned more than less educated workers. However, the results suggest that the earnings differentials between more and less educated workers were smaller than corresponding differentials in marginal products for production workers. This finding implies that some of the labor markets examined were not perfectly competitive. Although the precise nature of the imperfect competition cannot be identified with this methodology, the results also imply that the allocative inefficient performance of some plants partially contributed to the inefficiency of the labor markets.

Suggested Citation

  • Takii, Sadayuki, 2003. "Do Education Earnings Differentials Reflect Productivity?: Evidence From Indonesian Manufacturing 1996," EIJS Working Paper Series 169, Stockholm School of Economics, The European Institute of Japanese Studies.
  • Handle: RePEc:hhs:eijswp:0169
    as

    Download full text from publisher

    File URL: http://swopec.hhs.se/eijswp/papers/eijswp0169.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Hellerstein, Judith K & Neumark, David, 1999. "Sex, Wages, and Productivity: An Empirical Analysis of Israeli Firm-Level Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 95-123, February.
    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. Jones, Patricia, 2001. "Are educated workers really more productive?," Journal of Development Economics, Elsevier, vol. 64(1), pages 57-79, February.
    4. Zadia M. Feliciano, 2001. "Workers and Trade Liberalization: The Impact of Trade Reforms in Mexico on Wages and Employment," ILR Review, Cornell University, ILR School, vol. 55(1), pages 95-115, October.
    5. World Bank, 2002. "World Development Indicators 2002," World Bank Publications, The World Bank, number 13921.
    6. Kenneth R. Troske, 1999. "Evidence On The Employer Size-Wage Premium From Worker-Establishment Matched Data," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 15-26, February.
    7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    8. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Labor productivity; Wage differentials; Indonesia;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:eijswp:0169. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nanhee Lee). General contact details of provider: http://edirc.repec.org/data/eihhsse.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.