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

Christos Sakellariou

No 906, Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre

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.

Keywords: Wage inequality; counterfactual decompositions; Indonesia (search for similar items in EconPapers)
JEL-codes: D33 J31 J42 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2009-06
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Persistent link: https://EconPapers.repec.org/RePEc:nan:wpaper:0906

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