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In January 1998 a significant policy reform deregulated agriculture in Indonesia. It sought to eliminate distorting local monopolies, monopsonies, trade restrictions, interisland maximum shipment quotas and other barriers that effectively lowered farmgate prices. Many of these had been constructed to benefit the Soeharto family and their business cronies.
This article uses repeated cross-sectional data for the years 1986 to 1998 to examine how the median and spread in the distribution of wages among workers of different age and gender were affected by the economic growth and contraction in output during this period. It finds that it is mainly the younger cohorts of male and female workers that have reaped the benefits of the growing employment and wages in the formal sector.
During the economic crisis, the poverty rate in Indonesia changed relatively quickly in short periods of time, implying that there were a large number of households which moved in and out of poverty relatively frequently and experienced relatively short periods of poverty.
A standard method for calculating poverty lines (e.g. Ravallion, 1994) is not fully specified. The choice of the “reference population” for determining food baskets is left to the decision of the individual analyst. However, the poverty line can be quite sensitive to the real income of the reference group because the “quality” of the food basket—measured as the food expenditures per calories—rises sharply with income.
Indonesia changed its development strategy from an inward-looking import substitution to an outward-looking export orientation in the mid 1980s. Deregulation measures introduced during this period have made the Indonesian economy become more integrated with the world economy. This study examines the impact of a more globally integrated Indonesian economy on its labor market.
