Contributing factors of labor productivity in the industrial sector in Indonesia: a comparative study among regions
DOI:
https://doi.org/10.22437/ppd.v8i3.9626Keywords:
Contributing factors, Labor productivity, Industrial sectorAbstract
TIndonesia’s degree of competitiveness in attracting investment is relatively low compared to other ASEAN countries, e.g., Singapore, Malaysia, Thailand, and Vietnam, despite the country’s potential resources. Specifically, low labour productivity in industrial sector led to lower degree of investment competitiveness in Indonesia. Thus, this study aims to examine the transformation of economic structures and factors determining the regional labor productivity in industrial sector in Indonesia. This study employs multiple regression method with panel data approach on 34 provinces in Indonesia from 2014 to 2019. This study suggests that, in general, the decline of agriculture sector share in the Eastern part of Indonesia was greater than the Western part of Indonesia. Furthermore, the composition of labor absorption in Sulawesi, Maluku, Papua, and Kalimantan decline periodically. This research also suggests that the factors leading to improvement of productivity in the Industrial sector in Western part of Indonesia is real wages. Moreover, provision of electricity is the contributing factor and hampers labor productivity in the Eastern part of Indonesia. This study further concluded that supply of electricity is substitutional to labor which result in the decline of productivity
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Zhu, G. & Tan, K.Y. (2001). Foreign Direct Investment and Labor Productivity: New Evidence from China As the Host. Thunderbird International Business Review, 42 (5), 507 – 528.
Amassoma, D., & Nwosa, P.I. (2013). The Impact of Unemployment Rate on Productivity Growth in Nigeria: An Error Correction Modeling Approach. International Journal of Economics and Management Sciences, 2(8), 1 - 13.
Amirkhalkhali, S. & Dar, A. (2019). Trade Openness, Factor Productivity, and Economic Growth: Recent Evidence From OECD Countries (2000-2015). Applied Econometrics and International Development, 19(1), 5 – 14.
Bester, H. & Petrakis, E. (2004). Wages and Productivity Growth in a Dynamic Monopoly. International Journal of Industrial Organization, 22 (1), 83 – 100.
Bräuningera, M. & Pannenberg, M. (2002). Unemployment and Productivity Growth: An Empirical Analysis within an Augmented Solow Model. Economic Modelling, 19(1), 105 – 120.
Carree, M. A. (2011). Technological Progress, Structural Change and Productivity Growth: A Comment. Structural Change and Economic Dynamics, 14(1), 109 – 115.
Cecchini, L. & Lai-Tong, C. (2011). The Links Between Openness and Productivity in Mediterranean Countries. Applied Economics, 40(6), 685 – 697.
Chenery, H. B. & Syrquin, M. (1975). Patterns of Development, 1950- 1970. London: Oxford University Press.
Dollard, M. F. & Neser, D. Y. (2013). Worker Health is Good for The Economy: Union Density and Psychosocial Safety Climate as Determinants of Country Differences in Worker Health and Productivity in 31 European Countries. Social Science & Medicine, 92(3), 114 – 123.
Dritsaki, C. (2016). Real Wages, Inflation, and Labor Productivity: Evidences from Bulgaria and Romania. Journal of Economic & Financial Studies, 4(5), 24 – 35.
Elmawazini, K. (2014). FDI Spillovers, Efficiency Change and Host Country Labor Productivity: Evidence from GCC Countries. Atlantic Economic Journal, 42(4), 399 – 411.
Fagerberg, J. (2014). Technological Progress, Structural Change and Productivity Growth: A Comparative Study. No 5, Working Papers from Centre for Technology, Innovation and Culture, University of Oslo. http://www.sv.uio.no/tik/InnoWP/2000_Fagerberg_SCED_manuscript_2014.pdf
Filiztekin, A. (2000). Openness and Productivity Growth in Turkish Manufacturing. Global Trade Analysis Project, Sabanci University Discussion Paper Series in Economics. gtap.agecon.purdue.edu.
Gallegati, M., Ramsey, J. B. & Semmler, W. (2014). Does Productivity Affect Unemployment? A Time-Frequency Analysis for the US. Wavelet Applications in Economics and Finance, Book Series 20, 23 - 46.
Garnero, A., Kampelmann, S. & Rycx, F. (2014). Part-Time Work, Wages, and Productivity: Evidence from Belgian Matched Panel Data, ILR Review, 67(3), 926 – 954.
Goh, S. K. (2009). Is Productivity Linked To Wages? An Empirical Investigation in Malaysia. Published in: CenPRIS Working Paper Series 102/09.
Holman, C., Joyeux, B. & Kask, C. (2008). Labor Productivity Trends Since 2000, By Sector and Industry. Monthly Labor Review, 7(1), 64 - 82.
Khalifah, N. A. & Adam, R. (2009). Productivity Spillovers from FDI in Malaysian Manufacturing: Evidence from Microâ€Panel Data. ASIAN Economic Journal, 23 (2), 143 -167.
Kumar, S., Webber, D.J. & Perry, G. (2011). Real Wages, Inflation and Labour Productivity in Australia. Journal Applied Economics, 44(23), 2945 – 2954.
Lee, J.W. (2005). Human Capital and Productivity for Korea's Sustained Economic Growth. Journal of Asian Economics, 16(4), 663 – 687.
McCunney, R.J. (2001). Health and Productivity: A Role for Occupational Health Professionals. Journal of Occupational and Environmental Medicine, 43(1), 30 - 35.
Min W. F., & Tsang, M. C. (1990). Vocational Education and Productivity: A Case Study of the Beijing General Auto Industry Company. Economics of Education Review, 9(4), 351 – 364.
Mitra, A., Sharma, C. & Véganzonès-Varoudakis, M-A. (2012). Estimating Impact of Infrastructure on Productivity and Efficiency of Indian Manufacturing. Journal Applied Economics Letters, 19 (8), 779 – 783.
Nakano, M. & Managi, S. (2008). Regulatory Reforms and Productivity: An Empirical Analysis of The Japanese Electricity Industry. Energy Policy, 36(1), 201 – 209.
Rangazas, P. (2002), The Quantity and Quality of Schooling and U.S. Labor Productivity Growth (1870–2000). Review of Economic Dynamics, 5 (4), 932 – 964.
Shiyi Chen, S., Jefferson, G. H. & Zhang, J. (2011). Structural Change, Productivity Growth and Industrial Transformation in China. China Economic Review, 22(1), 133 – 150.
Soekimana, A., Pribadib, K.S. Soemardi, B. W. & Wirahadikusumah, R. D. (2011). Factors Relating to Labor Productivity Affecting the Project Schedule Performance in Indonesia. Procedia Engineering, 14, 865 – 873. The Proceedings of the Twelfth East Asia-Pacific Conference on Structural Engineering and Construction: EASEC12
Strauss, J. & Wohar, W.E. (2004). The Linkage Between Prices, Wages, and Labor Productivity: A Panel Study of Manufacturing Industries. Southern Economic Journal, 70 (4), 920 – 941.
Surjaningsih, N., & Permono, B. P. (2014). Dinamika Total Factor Productivity Industri Besar dan Sedang Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 16(3), 277 - 308.
Tovar, B. Ramos-Real, F., & Almeida, E. F (2011). Firm Size and Productivity. Evidence From the Electricity Distribution Industry in Brazil. Energy Policy, 39(2), 826 -833.
Vergeer, R. & Kleinknecht, A. (2014). The Impact of Labor Market Deregulation on Productivity: A Panel Data Analysis of 19 OECD Countries (1960 - 2004). Journal of Post Keynesian Economics, 33(2), 371- 408.
Wang, Y. (2010). FDI and Productivity Growth: The Role of Interâ€Industry Linkages. Canadian Journal of Economics, 43(4), 1243 – 1272.
Wang, Y. (2012). Openness and Productivity: The Role of Imports, FDI and International Telecommunications, Latin American Journal of Economics, 49(1), 125 – 145.
Wu, Y. (2004). Openness Productivity and Growth in The APEC Economies. Empirical Economics, 29, 593 – 604.
Zhu, G. & Tan, K.Y. (2001). Foreign Direct Investment and Labor Productivity: New Evidence from China As the Host. Thunderbird International Business Review, 42 (5), 507 – 528.
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Published
2020-08-31
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Arham, M. A., & Junus, S. (2020). Contributing factors of labor productivity in the industrial sector in Indonesia: a comparative study among regions. Jurnal Perspektif Pembiayaan Dan Pembangunan Daerah, 8(3), 277 - 286. https://doi.org/10.22437/ppd.v8i3.9626
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Copyright (c) 2020 Muhammad Amir Arham, Stella Junus
This work is licensed under a Creative Commons Attribution 4.0 International License.
