Analysis of employment elasticities in Indonesia 1990-2007

WIDHAYOKO, Dr. Yonosuke Hara

2009 | Tesis | S2 Magister Ekonomika Pembangunan

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Employment elasticity with respect to output (also called employment intensity of economic growth) denotes the increase of labor force employed in industrial sectors with respect to economic growth. Using simple regression in the logarithm form to analyze time series data from 1990–2007, this research paper aims to analyze the elasticity of employment with respect to regional output or GRDP (gross regional domestic product) of three industrial sectors in both the provinces and islands of Indonesia: agriculture; trade, hotel, and restaurant (THR); and manufacturing and services sectors (construction, transportation & communication, finance, public & private services). It was found that overall, employment elasticities in Indonesia are less than one. The analysis showed that industrial sectors tended to be less labor intensive. It also showed that in 2000– 2007 there were declining trends of employment, especially in agricultural and THR and manufacturing sectors. On the other hand, employment in the service sectors (modern sectors) tended to increase. This is particularly because of construction, finance, and the private service sector, which are characterized as labor intensive.

Kata Kunci : Employment elasticity,Regional output,Intensive use of labor