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Changing Wage Distributions and the Evolution of Wage Inequality in Indonesia:1994 – 2007

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  • Chris SAKELLARIOU

    (Division of Economics,School of Humanities and Social Sciences, Nanyang Technological University, Singapore
    Nanyang Technological University, Singapore)

Abstract

This paper investigates the developments in wage inequality in Indonesia from 1994 to 2007. Wage changes are decomposed at the mean as well along the wage distribution. In earlier years, the substantial growth in the earnings of workers was accompanied by moderately declining earnings inequality, a development driven by the effect of coefficients (“prices”). However, in recent years, wage inequality increased substantially. These results are attributed to the effect of coefficients which increased sharply at higher deciles of the earnings distribution. Changes in wage inequality over the period examined are related to developments in the real minimum wage over time, the effects of the 1997-98 financial crisis and increases in the return to skill in recent years.

Suggested Citation

  • Chris SAKELLARIOU, 2009. "Changing Wage Distributions and the Evolution of Wage Inequality in Indonesia:1994 – 2007," Economic Growth Centre Working Paper Series 0906, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
  • Handle: RePEc:nan:wpaper:0906
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    References listed on IDEAS

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    More about this item

    Keywords

    Wage inequality; counterfactual decompositions; Indonesia;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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