Technological change, skill demand, and wage inequality: Evidence from Indonesia

Jong-Wha Lee, Dainn Wie

Research output: Contribution to journalArticle

18 Citations (Scopus)

Abstract

This study provides empirical evidence of the impact that technological progress has on wage inequality in Indonesia. The share of educated workers and their skill premiums have recently increased. A supply-demand analysis, using labor force survey data during 1990-2009, shows that both the between- and within-industry shifts of labor demand that favored skilled workers contributed to the widening wage inequality since the early 2000s. Evidence from firm-level data in the manufacturing sector indicates that the diffusion of foreign technologies through imports and foreign direct investment caused demand to shift toward more skilled labor and increased wage inequality.

Original languageEnglish
Pages (from-to)238-250
Number of pages13
JournalWorld Development
Volume67
DOIs
Publication statusPublished - 2015 Mar 1

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Keywords

  • Foreign direct investment
  • Globalization
  • Indonesia
  • Technology
  • Wage inequality

ASJC Scopus subject areas

  • Economics and Econometrics
  • Development
  • Geography, Planning and Development
  • Sociology and Political Science

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