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Journal : Jurnal Perspektif Pembiayaan dan Pembangunan Daerah

Contributing factors of labor productivity in the industrial sector in Indonesia: a comparative study among regions Muhammad Amir Arham; Stella Junus
Jurnal Perspektif Pembiayaan dan Pembangunan Daerah Vol. 8 No. 3 (2020): Jurnal Perspektif Pembiayaan dan Pembangunan Daerah
Publisher : Program Magister Ilmu Ekonomi Pascasarjana Universitas Jambi

Show Abstract | Download Original | Original Source | Check in Google Scholar | Full PDF (604.828 KB) | DOI: 10.22437/ppd.v8i3.9626

Abstract

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
Supporting factors for labor productivity in Indonesia Muhammad Amir Arham; Fitri Hadi Yulia Akib
Jurnal Perspektif Pembiayaan dan Pembangunan Daerah Vol. 10 No. 5 (2022): Jurnal Perspektif Pembiayaan dan Pembangunan Daerah
Publisher : Program Magister Ilmu Ekonomi Pascasarjana Universitas Jambi

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.22437/ppd.v10i5.14447

Abstract

Indonesia's investment attractiveness is still weak compared to other ASEAN countries; one of the reasons is the low labor productivity. On this basis, this study aims to find out what factors are dominantly driving labor productivity in Indonesia statistically, as well as the right policy model to encourage labor productivity, bringing Indonesia a high-income country. The analytical method used in this study is panel data regression analysis, 2014 - 2018 period, covering 34 provinces in Indonesia. The study suggests that fiscal policy through general allocation fund (DAU) or transfers signifies increasing labor productivity, while special allocation fund (DAK) does not. Economic factors such as labor costs, the contribution of the agricultural sector, and economic openness can increase labor productivity, while industrial sector share has no effect. Social factors measured by the education level of general secondary schools and life expectancy (health) affect labor productivity enhancement; it is different from a vocational school. Consequently, the number of unemployed vocational school graduates is high.