EIJS Working Papers Series
DO EDUCATION EARNINGS DIFFERENTIALS REFLECT PRODUCTIVITY?: EVIDENCE FROM INDONESIAN MANUFACTURING 1996
Abstract: The purpose of this paper is to examine the efficiency of
labor markets for workers with different levels of educational achievement
in Indonesian manufacturing plants in 1996. Specifically, the paper asks
(1) are earnings for more educated workers higher than for less educated
workers, and (2) do earnings differentials between more educated workers
and less educated workers reflect corresponding productivity differentials?
The empirical findings suggest that more educated production workers earned
more than less educated workers. However, the results suggest that the
earnings differentials between more and less educated workers were smaller
than corresponding differentials in marginal products for production
workers. This finding implies that some of the labor markets examined were
not perfectly competitive. Although the precise nature of the imperfect
competition cannot be identified with this methodology, the results also
imply that the allocative inefficient performance of some plants partially
contributed to the inefficiency of the labor markets.
Keywords: Labor productivity; Wage differentials; Indonesia; (follow links to similar papers)
JEL-Codes: J24; J31; O12; (follow links to similar papers)
24 pages, January 30, 2003
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Nanhee Lee ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom