Home » Publication » The Response of Hours Worked to Changes in Minimum Wage in Indonesia
Pratomo, Devanto S. (2012). "The Response of Hours Worked to Changes in Minimum Wage in Indonesia" Paper presented at the 9th annual conference of the HDCA, 5-7 September 2012, Jakarta, Indonesia.
This study examines the effect of a change in minimum wage on hours worked of urban paid employment in Indonesia using the Indonesian Labour Force Survey (Sakernas). Compared to the existing developing countries literature, the sample selection corrections based on a multinomial logit for a potential selection bias from a non-random sample is taken into account. This study compares the estimates from two different approaches to correct for a potential selection bias based on multinomial logit, including Lee’s and Bourguignon et al’s selection biased correction approaches. This study extends the hours worked specification by analysing the effects of minimum wage on hours worked separately across individuals in different groups of workers in terms of gender (male-female workers). This study found that an increase in the minimum wage increases hours worked of the existing urban paid employees in Indonesia. This study also found that the effect of minimum wage on hours worked is stronger for female workers as the most vulnerable workers in the labour market.