Sectoral Growth and Job Creation: Evidence from Indonesia

Daniel Suryadarma, Asep Suryahadi, Sudarno Sumarto
Labor, Migration & Informal Sector, Social Protection
Indonesia
Externally Published Content, October, 2013, Final
Source: Journal of International Development 25 (4), May 2013, Pages 549–561


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Abstract

We develop a growth-employment model that decomposes the Indonesian economy into six components, based on a combination of economic sectors and location, and ascertain the sectors that created the most jobs in Indonesia over the past two decades. We find that urban employment is mostly driven by higher growth in the services sector, especially areas that require skilled personnel. Meanwhile, the agriculture sector growth still drives employment in rural areas, although it appears that the services sector also creates a significant number of jobs. Based on these findings, we provide some policy recommendations. 


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