Economics Development Analysis Journal

Does Minimum Wage Reduces Gender Inequality in Indonesia?

2024-04-02T12:48:21+07:00

Gender inequality is a persistent challenge in many societies, reflecting disparities in access to resources, opportunities, and decision-making power between men and women. One policy area that has garnered significant attention in the quest for gender equality is the minimum wage. By setting a wage floor for all workers, minimum wage policies aim to enhance the economic well-being of low-income individuals, a group in which women are often overrepresented. However, the relationship between minimum wage policies and gender inequality is complex, and its impact remains a subject of extensive debate and research. This research investigates the impact of annual minimum wage policy changes in Indonesia on gender inequality using a dynamic panel data approach encompassing 34 provinces over eight years (2015-2022). Contrary to expectations, the results suggest that both in the short and long run, minimum wage policy increases gender inequality. This highlights the complexity of the relationship between minimum wage adjustments and gender dynamics, underscoring the need for nuanced policy design to ensure gender equality in labor market outcomes.

The Effect of Asean Financial Services Liberalisation on Economic Growth

2024-03-27T10:19:11+07:00

In 1997, ASEAN agreed to liberalise the trade in financial services in the region marking its initial agreement with AFAS (ASEAN Framework Agreement in Services). In 2019, AFAS concluded the eighth round of the trade in financial services negotiations. Based on the agreement, this research aims to quantify the level of openness and investigate the connection between the openness level and and the economic growth ASEAN 5 countries. Using random effects panel data, the ASEAN financial services liberalisation positively and significantly affects economic growth. The results confirm that liberalisation is on track. Learning from the European Union’s experience in financial services integration, this research suggests that strengthening cross-border regulation and supervision is essential for moving forward after liberalisation.

Economic Simulation of Central Java: Indonesia’s Province-Based IRIO Analysis

2024-04-03T20:14:37+07:00

This study simulates increased sectoral investment in the economy of Central Java Province, Indonesia. Using output and household income indicators, several policy scenarios are applied to Indonesia's interregional input-output (IRIO) tables, including green economic scenarios. The aim of this research is to identify the most impactful policy on the economy of Central Java based on the results of investment policy simulations. Investment injections are conducted in production sectors within Central Java and in sectors outside the province. By assessing the direct, indirect and induced effects on economic sectors and households, cross-sectoral insights for regional development policies, the simulation results show that the Central Java economy experiences the best impact in terms of sectoral household output and income levels. In IRIO analysis, this impact is seen as a multiplier effect from sectors within and beyond Central Java. The findings imply that policies focused on local sector development will generate the highest income levels and largest output multiplier for Central Java given the existing economic conditions, while green economic policies do not have insignificant economic impacts compared to non-green policies. It is crucial to develop additional policy scenarios targeting both local and non-local industries to obtain more sensitive simulation results.

Youthful or Aged: Exploring Age Dependency Ratios and Inflation Trends in ASEAN Countries

2024-04-03T20:01:58+07:00

There has been a growing interest to understand inflation through demographic lens using a critical key indicator known as the dependency ratio. However, studies investigating this nexus in terms of ASEAN nations are limited, despite ASEAN undergoing a demographic transition. Therefore, this paper aims to investigate the impact of age-population ratio on the inflation rate across 8 ASEAN countries during 2000-2020. This research uses Feasible Generalized Least Squares (FGLS) estimation, as it is robust to groupwise heteroskedasticity, serial and cross-sectional correlations. The result reveals that population aging is deflationary. However, the elderly dependence successfully explains the price dynamic after controlled by monetary and macro variables. It means that aging matters for inflation along with the macro variables dynamic. In addition, the analysis also sheds light on the impacts of the young dependency, which does not significantly impact the inflation rate when macro variables are taken into account. This research also underlines the importance of considering demographic dynamics in the future monetary policy decisions.

Household Consumption and Electronic Money Transactions in Indonesia: VECM Approach

2024-03-28T07:06:07+07:00

The high contribution of household consumption to GDP reflects the significant level of public consumption in Indonesia. This is evident from the annual increase in transactions through digital payment system, which facilitate easier for people to consume goods and services. Previous studies have offered various perspectives on the impact of electronic money transactions on household consumption, in both the short and long run. Therefore, this study aims to analyze the relationship between electronic money transactions and household consumption in Indonesia. By employing the Vector Error Correction Model (VECM) and examining data from 2009Q1 to 2022Q4, the study aims to provide insights into the dynamics of short-term and long-term relationships among electronic money transactions, household consumption expenditure, real income, and interest rates. Based on the results in the short term, it was found that electronic money and real income are positively related to household consumption expenditure in Indonesia. With the increase in electronic money transactions and people's income levels rising, households tend to spend more money, contributing to increased societal consumption. However, this positive relationship does not persist in the long term, suggesting that electronic money does not significantly impact household spending patterns over extended periods. Real income, on the other hand, continues to have a consistent effect in the long term. Furthermore, interest rates do not significantly influence consumption expenditure in either the short or long term. This implies that changes in interest rates do not notably affect consumer behaviour regarding spending habits in Indonesia.