Effect of the farmer term of trade and farmworkers wages on rural unemployment and poverty in Indonesia

Yarlina Yacoub () and Restiatun Restiatun ()

Asian Development Policy Review, 2024, vol. 12, issue 2, 82-90

Abstract: This study aims to determine the determinants of the welfare of agricultural sector workers who come from poor households in rural areas. The exchange rate of farmers and the wages of farm laborers will affect the level of employment in the agricultural sector, which in turn will affect the level of rural poverty. The methodology used in this study uses a panel data regression model with a recursive equation model. The best model for unemployment estimation is the random effect model, while the best model for poverty estimation is the fixed effect model. The results showed that the daily wage of farm laborers had a significant negative effect on unemployment. This may be due to the fact that higher wages will increase the number of workers who are willing to work in the agricultural sector, so unemployment will fall. While the unemployment variable has a significant positive effect on the level of rural poverty. The practical implication of these research findings is that to reduce poverty in rural areas, efforts from the government are needed to increase the wages of farm laborers, as the government sets minimum wages in the formal sector. The higher daily wages of agricultural laborers will attract unemployed people in villages to work in the agricultural sector.

Keywords: Daily wage farmer workers; Farmer’s term of trade; Rural poverty; Unemployment. (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://archive.aessweb.com/index.php/5008/article/view/4978/7855 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:asi:adprev:v:12:y:2024:i:2:p:82-90:id:4978

Access Statistics for this article

More articles in Asian Development Policy Review from Asian Economic and Social Society
Bibliographic data for series maintained by Robert Allen ().