2000
DOI: 10.1080/00074910012331337803
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Labour Market Adjustment to Indonesia's Economic Crisis: Context, Trends and Implications

Abstract: This paper focuses on labour market adjustment during the economic crisis of 1997–98. It shows how labour processes help explain better outcomes for the poor than were initially predicted. The Indonesian experience is viewed in a framework that contrasts two extreme models: a Keynesian world of rigid real wages, and a neoclassical situation of flexible adjustment to economic shocks. It was found that the Indonesian case is more consistent with the neoclassical than the Keynesian model, despite the tendency for… Show more

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Cited by 84 publications
(74 citation statements)
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“…Unemployment rates also hardly changed (from 9.9 percent to 10.3 percent), In other words, while very mild added worker effects may have increased participation, a smaller share of those in the labor force were employed. 17 14 In the sample of 15 that report sectoral employment, agricultural employment growth increased by 1.5 % points, service sector growth by 0.2 % points and industrial employment growth fell by 3.3% points 15 Past crises estimates suggest a similar story: during the 1997 Asian crisis, some 30-40% of displaced urban workers are estimated to have moved to agricultural jobs (Manning 2000). Evidence indicates that worker reallocation and the quality of new jobs created are procyclical, rather than countercyclical (Bowlus 1993).…”
Section: Figure 5: Decomposing the Slowdown In The Growth Of Gdp Per mentioning
confidence: 99%
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“…Unemployment rates also hardly changed (from 9.9 percent to 10.3 percent), In other words, while very mild added worker effects may have increased participation, a smaller share of those in the labor force were employed. 17 14 In the sample of 15 that report sectoral employment, agricultural employment growth increased by 1.5 % points, service sector growth by 0.2 % points and industrial employment growth fell by 3.3% points 15 Past crises estimates suggest a similar story: during the 1997 Asian crisis, some 30-40% of displaced urban workers are estimated to have moved to agricultural jobs (Manning 2000). Evidence indicates that worker reallocation and the quality of new jobs created are procyclical, rather than countercyclical (Bowlus 1993).…”
Section: Figure 5: Decomposing the Slowdown In The Growth Of Gdp Per mentioning
confidence: 99%
“…17 Reduced earnings may lead to a rise in labor market participation. Some crises appear to have driven more women and children into the labor market, especially in rural areas (Manning 2000, McKenzie 2004and Ezemenari et al 2003. However, in others participation rates appeared unresponsive.…”
Section: Figure 5: Decomposing the Slowdown In The Growth Of Gdp Per mentioning
confidence: 99%
“…Whenever the wages in the modern sector fall below the reservation wage, workers will move back to the 'traditional sector' provided that the cost of moving is not too high . This process happened during the East Asian financial crisis in Indonesia, where millions of workers moved back to the agricultural sector and very little unemployment was detected in the modern sector (Hugo 2000;Manning 2000;Fallon and Lucas 2002).…”
Section: Earlier Findings and Our Hypothesismentioning
confidence: 99%
“…Produktivitas pekerja berkaitan dengan upah nominal (Manning, 2000). Tingkat upah tinggi yang menjadikan pekerja sejahtera hanya dapat dipenuhi apabila ada peningkatan produktivitas yang memadai sesuai dengan harapan pengusaha (Tjiptoherijanto, 1993; SME-RU, 2002).…”
Section: Tinjauan Referensi Hubungan Tingkat Upah Dan Produktivitasunclassified