Wages, Employment and Economic Shocks: Evidence from Indonesia

James Smith, Duncan Thomas, E. Frankenberg and K. Beegle

Working Papers from RAND - Labor and Population Program

Abstract: After over a quarter century of sustained economic growth, Indonesia was struck by a large and unanticipated crisis at the end of the 20th century. Real GDP declined by about 12% in 1998. Using 13 years of annual labor force data in conjunction with two waves of a household panel, the Indonesia Family Life Survey (IFLS), this paper examines the impact of the crisis on labor market outcomes. Aggregate employment has remained remarkably robust through the crisis although there has been significant switching within sectors. The drama of the crisis lies not in aggregate employment but in real hourly earnings which, in one year, collapsed by around 40% for urban workers--be they males or females, in the market sector or self-employed. Declines of the same magnitude are recorded for females in the rural sector and rural males working for a wage. In stark contrast, real hourly earnings of self-employed males in rural areas have remained essentially stable.

Keywords: WAGES; HOUSEHOLDS; SURVEYS; ECONOMIC POLICY; DEVELOPING COUNTRIES; ECONOMIC CONDITIONS (search for similar items in EconPapers)
JEL-codes: D30 H55 J31 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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