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Technological Change, Skill Demand, and Wage Inequality: Evidence from Indonesia

By LEE Jong-Wha and WIE Dainn


This paper provides empirical evidence on the impact of technological progress on wage inequality in Indonesia. The share of educated workers and their skill premium have increased recently for overall industry. A supply and demand analysis using the labor force survey data of 1990-2009 shows that both the between and the within industry shifts of labor demand favoring skilled workers contributed to widening wage inequality. The evidence from the firm level data for manufacturing sector indicates that diffusion of foreign technologies through imports and foreign direct investment caused demand shift toward more skilled labor and increased wage inequality.JEL Classification Codes: J24, J31, O15, O33This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF—2008-362-A00001) and a Korea University Grant.Embargo Period 24 months

Topics: wage inequality, technology progress, globalization, foreign direct investment, Indonesia
Publisher: 'Elsevier BV'
Year: 2015
DOI identifier: 10.1016/j.worlddev.2014.10.020
OAI identifier:

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