Human Capital, Income and Job Opportunities in Indonesia

Abstract

This study used interviews with 150 online informal workers in Jakarta. 80% of the respondents we interviewed were high school graduates and 20% did not have a high school diploma. Based on the results of interviews, 70% of respondents who had high school certificates had worked in the formal sector and chose to work in the informal sector and respondents who did not have high school certificates had never worked in the formal sector. To anticipate the interview results, we collected secondary data from world banks and the Indonesian Central Bureau of Statistics regarding data on unemployment in Indonesia, high school graduation and high school labor demand. Then we process all data in the form of an employment opportunity index which is calculated based on the supply and demand for labor where the supply of labor is the number of unemployed and graduated high school and the demand for labor in the demand for labor is high. school level. The income index is obtained from interviews with 150 informal workers by taking into account income while working in the formal sector, income in the informal sector and investment in education in the form of education from primary to final education. The human capital index is obtained from the difference in income and forecasting the difference in income of respondents who have a high school diploma and those who do not have a high school diploma. We use average data or all the data obtained is averaged based on a group of variables determined based on literature review and background and time series, then the regression is carried out using the moving average autoregression method. We find that human capital and job opportunities have positive relationship with income.

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“…The data suggest that respondents with a more stable income held positions in the civil sector (PNS), military (TNI), or police, or were employees of state-owned enterprises (SOE/BUMN) or regional government-owned enterprises (BUMD). However, the type of position and average income appear to be less stable for contract employees with less than a year of experience [63][64][65]. In contrast, contract employees with more than one year of service tended to have a more stable income.…”