Minimum Wage and Poverty: Empirical Study on District Panel Data in Java, Indonesia (original) (raw)
The Relation Between Minimum Wages and Poverty in Indonesia: An Islamic Perspective
Global Review of Islamic Economics and Business, 2017
This study is part of Islamic economics research that aims to determine the relationship between the minimum wage and poverty rate in Indonesia, especially case studies in West Java, Central Java, East Java, Special Region of Yogyakarta, and Banten during the period 2007-2013. In addition to the primary independent variable, there are six control variables are used, the level of education, the GDP per capita, unemployment rate, inflation rate, average wages and economic growth. The analysis technique used in this study are Arellano Bond Dynamic GMM (Generalized Method of Moment). The results of this study found that the minimum wage is not a significant effect on poverty levels in 2007-2013, especially in the districts/cities in West Java, Central Java, East Java, Special Region of Yogyakarta and Banten. Based on the explanation above, it can be concluded that government has responsibilities and sufficient role to reduce poverty through minimum wage standardization, the state also h...
The Effect of the Unployment Rate and Minimum Wage on Poverty Rate in West Java
Jurnal Ekonomi Trisakti
This study aims to determine the analysis of the effect of the unemployment rate and minimum wage on the poverty rate in the province of West Java in 2015 – 2019. This type of research uses quantitative data analysis. The data used in this study is secondary data obtained from the Central Statistics Agency (BPS). The secondary data used in this study is panel data that uses a combination of time series (time series) from 2015 - 2019 and a cross section of 6 cities in West Java Province and succeeded in producing 30 observations. Panel Data Regression Calculation using Eviews 9 software. The results of the study indicate that the Unemployment Rate has a positive and insignificant effect on the Poverty Level in the province of West Java. It can be seen from the results where the coefficient value is 0.016342 with a probability value of 0.9232 > 0.05. The Minimum Wage has a negative and significant effect on the Poverty Level in the province of West Java. It can be seen from the res...
2021
Background: Poverty is a major problem from year to year for the central and local governments. Poverty makes the level of a government's economy not progress. This study aimed to analyze the effects of economic growth, education, health, and minimum wage on poverty in Kudus, Central Java. Subjects and Method: A cross sectional study was conducted in Kudus, Central Java. The data were obtained from the Central Java Statistics Agency from 1996 to 2020. The dependent variable was poverty. The independent variables were economic growth, education, health, and minimum wage. The data were analyzed by a multiple linear regression. Results: High economic growth (b=-0.18; 95% CI=-0.36 to-0.01; p= 0.014), higher education (b=-0.91; 95% CI=-1.58 to-0.28; p= 0.010), good health (b=-0.37; 95% CI=-0.49 to-0.25; p <0.001), and higher minimum wage (b=-1.35; 95% CI=-2.24 to-2.56; p= 0.018) were associated with decreased risk of poverty. Conclusion: Economic growth, minimum wage, education, and health decrease the risk of poverty.
Sectoral Implications of Indonesia's Minimum Wage Policy: Empirical Evidence using Panel Data
2015
The absence of consensus of minimum wage effect on employment engenders study on this field remains a favour. Yet, little researches studied the functioning of minimum wage policy on sectoral employment comprehensively. Exploring Sakernas data of 2004-2013 in province level and sectoral-province level, this study notifies positive impact of minimum wage on general employment. This study also maintains that minimum wage is beneficial for rural, female, married, low educated employment. Minimum wage is empirically proved attractive for workforce to become a worker rather than an entrepreneur. Divergent effects of minimum wage on economic sectors appear regarding to characteristics of economic sector. Agricultural, forestry, hunting, and fishing sector; construction sector; wholesale trade, retail trade, restaurant and accommodation sector; finance, real estate, insurance, and business services sector; and community, social, and personal sector, which are labour intensive, positively a...
The Effects of Minimum Wage Throughout the Wage Distribution in Indonesia
Signifikan: Jurnal Ilmu Ekonomi
The global financial crisis in 2007 followed by Indonesia’s largest labor demonstration in 2013 encouraged turmoils on Indonesia labor market. This paper examines the effect of the minimum wage on wage distribution in 2007 and 2014 and how the minimum wage increases in 2014 affected the distribution of wage differences between 2007 and 2014. This study employs recentered influence function (RIF) regression method to estimate the wage function by using unconditional quantile regression. Furthermore, to measure the effect of the minimum wage increase in 2014 on the distribution of wage differences, it uses the Oaxaca–Blinder decomposition method. Using balanced panel data from the Indonesian Family Life Survey (IFLS), it found that the minimum wage mitigates wage disparity in 2007 and 2014. The minimum wage policy in 2014 leads to an increase in the wage difference between 2007 and 2014, with the largest wage difference being in the middle distribution.DOI: 10.15408/sjie.v7i2.6125
The Effect of Provincial Minimum Wage on Wage Inequality in Java
International Journal of Scientific Research in Science, Engineering and Technology, 2019
The minimum wage setting policy as an effort to improve wage distribution and expected to reduce income inequality is still being a debate in the literatures. However, similar studies, especially those that examine the impact of establishing minimum wages on the conditions of wages for workers in different percentile groups, have not been widely practiced in Indonesia. This study aims to analyze the increase in effective minimum wages against the wage gap of workers in the period 2008-2017 in Java using the National Labor Force Survey (Sakernas) data. Through the OLS method, we find that the impact of minimum wages is not the same among percentile groups. The effective minimum wage has a negative impact on the wage 30th percentile group where an increase in effective wage will reduces the gap between the 30th percentile and the 50th percentile. We find different result on 60th percentile. On this percentile, the effective minimum wage will increases the gap between the 60th percentile and the 50th percentile, this result implies a spillover.
Poverty is a condition in which a person is below the minimum standard value line, especially in terms of income and consumption. The phenomenon of poverty is one of the macroeconomic diseases, as a developing country poverty is a low standard of living. The purpose of this study was to analyze the effect of the variables of local original income, regional minimum wage, movement, and education simultaneously and partially on poverty in the Regency/City of Bali Province in the 2015-2020 period, and also to analyze the variables with the dominant contribution in influencing poverty. in the Regency/City of the Province of Bali in the 2015-2020 period. The data used in this study is secondary data obtained from the Central Statistics Agency as many as 54 data. The data analysis technique used in this research is multiple linear analysis technique. The results of the analysis show that local revenue, regional minimum wages, and education simultaneously have a significant effect on poverty in the districts/cities of Bali Province in the 2015-2020 period. Regional original income, regional minimum wage and education partially have a negative and significant effect on poverty. the variable partially has no effect on poverty. The education variable is the variable that has the most dominant influence on poverty in the districts/cities of Bali Province in the 2015-2020 period compared to local revenue, regional minimum wages, and movement.
Minimum wages and the fate of Indonesian young workers
2020
Government policies that are directly related to the relationship between workers and companies are determining minimum wages. The effect of this minimum wage becomes more varied for developing countries with large populations such as Indonesia. Young workers have sensitive effect to fluctuation of the minimum wage policy, whereas the percentage of Indonesia young workers is more than 20 percent of the total workforce in 2015-2019. Therefore, the aim of this research is to analyze the effect of minimum wage policies on the status of young workers in Indonesia using quantitative data from the National Labour Force Survey (Sakernas) 2015-2019 with the multinomial logit analysis method. The results of this study are an increase in the minimum wage decreases the probability of young workers to have status as paid workers in the covered sector. In urban areas, an increase in the minimum wage increases the probability of young male workers being unemployed and decreases the probability be...
Labor and Government Policies on Poverty Reduction in Sumatera Island, Indonesia
Jurnal Ekonomi Pembangunan, 2021
This study aims to analyze the effect of agricultural workers, education level, female workers and the role of government policies on poverty rate in Sumatra. Observations were made in 151 districts/cities in Sumatra during the period 2013-2015 and 2017-2018. The approach used is a panel data regression model. The method applied is random effect. The findings show the labor in the agricultural sector has a significant and positive effect on the poverty rate in Sumatra, while the level of education and government spending has a significant and negative effect on the poverty rate. The policy implication is that it is necessary to increase labor productivity in the agricultural sector and other industries that are more efficient. The government also needs to strengthen the agricultural sub-sector in order to have better value-added products. Optimizing and improving basic services such as education, health, economic and social.
Labor Conditions, Wages and Non-Cash Transfers in Poverty in Eastern Indonesia
Journal of Scientific Research, Education, and Technology (JSRET)
Poverty is a complex and prolonged problem because it touches all aspects of both social, economic and Environmental Society at large. The Eastern region of Indonesia still has a high percentage of poverty, there are 5 provinces with a predominance of poverty percentage identified as being at a high percentage of poor population, including Papua 27.33%, West Papua 22.67%, East Nusa Tenggara 21.10%, Maluku 17.74% and Gorontalo 16.17%. This study identifies the factors of productivity components of the poor with the variable influence of non-cash direct assistance, minimum wage and informal sector workers on poverty cases in 5 regions of eastern Indonesia. This study uses Panel Data with the ordinary Least Squaremethod, this researcher in the period 2016-2022 by using regional observation or (cross section) 5 provinces in eastern Indonesia including Maluku, Gorontalo, East Nusa Tenggara, Papua and West Papua. Informal sector workers (PSI) have a positive and significant effect, the Mi...
DETERMINANTS OF POVERTY LEVEL IN INDONESIA
Jurnal Ekonomi , 2022
This study observes that there is a slowdown in poverty reduction in Indonesia, so that in order to realize the achievement of no poverty in 2030 it is necessary to carry out further research related to the determinants of poverty in Indonesia. Researchers used panel data from 34 provinces in Indonesia for the 2015-2020 period. The model used is panel data regression using panel data regression analysis. The results of the study are that government spending directly has a significant effect on poverty and indirectly through unemployment has a significant effect but government spending does not have a significant effect on poverty through economic growth, investment has a significant effect on poverty but indirectly boththrough growth and unemployment have no significant effect.
Does Minimum Wage Reduces Gender Inequality in Indonesia?
Economics development analysis journal/Economics Development Analysis Journal, 2024
Gender inequality is a persistent challenge in many societies, reflecting disparities in access to resources, opportunities, and decision-making power between men and women. One policy area that has garnered significant attention in the quest for gender equality is the minimum wage. By setting a wage floor for all workers, minimum wage policies aim to enhance the economic wellbeing of low-income individuals, a group in which women are often overrepresented. However, the relationship between minimum wage policies and gender inequality is complex, and its impact remains a subject of extensive debate and research. This research investigates the impact of annual minimum wage policy changes in Indonesia on gender inequality using a dynamic panel data approach encompassing 34 provinces over eight years (2015)(2016)(2017)(2018)(2019)(2020)(2021)(2022). Contrary to expectations, the results suggest that both in the short and long run, minimum wage policy increases gender inequality. This highlights the complexity of the relationship between minimum wage adjustments and gender dynamics, underscoring the need for nuanced policy design to ensure gender equality in labor market outcomes.
Education, Unemployment, Minimum Wage And Health Impact On Poverty
IOSR Journals , 2019
The problem of poverty in East Java is heavily influenced by three main issues namely education, employment issues, and health problems. In the employment problem, there are two major problems namely unemployment and the minimum wage. In this study using a quantitative approach with variable used is the percentage of the highest education attained at the High School level, unemployment rate, minimum wage, and the life expectancy and the percentage of poverty in five districts in East Java province in the period 2012-2016. The analysis technique used is the technique of panel data analysis, and test equipment used is Eviews 10. The results of this study showed that partially that education and unemployment variables affect significantly while the minimum wage and health variables are not significant. And simultaneously all variables significantly influence poverty.
Poverty & Labour Markets in Indonesia
Poverty and the Labour Market in Indonesia: Employment Trends across the Wealth Distribution’, is among Indonesia’s first papers on the relationship between poverty and the labour market. The authors observed that the relative share of the rural working poor as a portion of all working poor has increased over time and that the majority of the working poor are employed in the agricultural sector. Furthermore, the working poor are predominantly and increasingly (in relative terms) concentrated in the informal sector of the economy. An important finding concerns the role of education in the likelihood of being poor or nonpoor. Results also suggest that only the attainment of higher secondary and tertiary education seems to increase the likelihood of being meaningfully protected against poverty.
A Poverty and Income Inequality in Indonesia
Journal of Research in Business, Economics and Management, 2020
This study aims to describe and evaluate government policies and strategies in overcoming the problem of poverty. The research method used in this study is the research approach used is descriptive qualitative. The results of this study indicate that many poverty alleviation programs carried out by the government have not yet brought significant change. The strategies that have been taken to overcome poverty not only prioritize economic aspects but pay attention to other dimensions to increase capacity and encourage productivity. The strategy chosen was to improve the basic ability of the poor to increase income, involving the poor in the whole process of poverty reduction; empowerment strategy. To support the success of this strategy, it should be done thoroughly, integratedly, across sectors, and adapted to the conditions of Indonesian social diversity.