Analysis of The Minimum Wage & The Gig Economy of Indonesia

Labor Economics

A 2011 study found that unemployment pushes workers into the gig economy. Indonesia’s labour market has changed a lot since then. This project tests whether that finding still holds today, and how minimum-wage policy fits in.

Status In progress

Context Economics, Nagoya University

Focus Minimum wage, gig work, macroeconomic drivers

Three ojek motorbike-taxi drivers waiting by a painted OJEK sign in Jakarta — Ojek drivers waiting for fares in Jakarta, 2004, before the ride-hailing apps.

Question

Does unemployment still push Indonesian workers into gig work?

Ride-hailing, delivery and platform work have grown quickly in Indonesia. If unemployment is still the main push factor, gig work acts as a safety net. If it isn’t, something else, such as minimum-wage levels or the platforms themselves, is drawing people in.

Motorbikes parked at a roadside ojek stand in Jakarta, with OJEK painted on a pole — An ojek stand in Jakarta, 2011: informal motorbike taxis waiting at the roadside.

An ojek driver in a high-visibility vest sitting on his motorbike in Mentok, Bangka Island — An ojek driver in Mentok, Bangka Island, 2022.

Scope

Minimum wage in Indonesia and the macroeconomic factors that drive it.
The unemployment to gig economy link reported in the 2011 study, re-tested on current data.

Front and back of an Indonesian 20,000 rupiah banknote — A 20,000 rupiah note. Minimum wages in Indonesia are set by each province.

Heavy traffic in central Jakarta with a school bus, a bajaj and motorbike riders, one in a green app-driver helmet — Traffic in Senen, Central Jakarta, 2014, with an app-based motorbike driver in the green helmet.

Status

The analysis is under way. Results, data sources and the regression output will be published here when it is complete.

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