Women's Economic Participation in Indonesia

Australia Indonesia Partnership
for Economic Governance
Women’s Economic Participation in Indonesia

A study of gender inequality in employment, entrepreneurship, and key
enablers for change
June 2017

The Australia Indonesia Partnership for Economic Governance (AIPEG) is a
facility to strengthen the evidence-base for economic policy in support of the
Indonesian government. The work is funded by the Australian government as
part of its commitment to Indonesia's growth and development.
This report has been prepared in a collaboration between AIPEG, the Australian
Department of Foreign Affairs and Trade (DFAT) and Monash University’s
Centre for Development Economics and Sustainability (CDES)1.

Women’s economic participation in Indonesia

Executive Summary
The Indonesian economy has undergone dramatic changes over the last few decades. Indonesia
achieved middle income status in 2004 and high growth also rapidly reduced poverty from 23 percent
of the population in 1999 to 11 percent in 2016. The share of manufacturing and services in the
economy is growing, and agriculture declining (although still a high level overall).
Yet one area that has not changed much is participation of women in the labour market.
This report presents new research on the labour market situation for women and gender wage gaps
in Indonesia, based on the National Socio-Economic Survey (Susenas). At 51 percent, Indonesia’s
female labour force participation rate is well below that for males (around 80 percent) and low relative
to countries at a comparable stage of development.
The main drivers of low female labour force participation in Indonesia are marriage, children below
two years of age in the household, low educational attainment (below upper-secondary and tertiary
levels) and changing economic structure (decline in the female-friendly sector of agriculture due to
transitions from rural to urban areas in particular).
One promising trend, however, is that the propensity for women to participate in the labour force
appears to be increasing among the younger generation, particularly the more educated living in
urban areas.
As a member of the G20 group of the world’s major economies, Indonesia has committed to
decreasing the gap between female and male labour force participation by 25 percent by 2025. Our
projections show that this target will only be reached under the most optimistic circumstances. Under
less optimistic (and arguably more realistic) assumptions, female labour force participation may even
decrease if the most recent trends continue. Policy support, together with shifting social norms and
practices is needed.
Our research also finds evidence of a significant gender wage gap in Indonesia. The gender wage gap
is 34 percent in the formal sector and 50 percent in the informal sector. Our analysis shows most of
this gap is not due to differences in productive characteristics but reflects discriminatory practices.
There is also strong evidence of ‘sticky floors’ in the formal sector – women at the lower end of the
wage distribution facing a much bigger gender wage gap than women in higher wage jobs. In the
informal sector (where most of the women participate), the wage gap is large and constant for all
workers.
In another area of economic participation, entrepreneurship, women tend to be under-represented.

This is despite the concentration of women in the self-employed informal sector. Low
entrepreneurship is often attributed to women’s difficulty accessing financial resources. The evidence
on this is however mixed and further research in this area is desirable.


The report also reviews existing research on key enablers for greater economic equality between
women and men – education, health, infrastructure, institutions and laws. In particular, education
equality is a critical pathway to economic opportunities later in life. Our review of the evidence finds
little in the way of gender education gaps amongst younger cohorts in Indonesia. However, the overall
educational performance of Indonesians is low.
On health indicators, gender gaps in areas such as child mortality and utilisation of health services,
observed in many developing countries, are not apparent in Indonesia. However, maternal mortality
rates are higher than in comparable countries. Equality in health is a critical area found to determine
human capital development (for example, healthier children and adults are more likely to obtain
higher education and participate more in the labour market).
Inadequate transport infrastructure and services are additional barriers to women’s full economic
participation. Efficient and safe transport, in particular can assist women to better juggle work and
family responsibilities.
Finally, institutions and laws signal commitment to improving gender equality. In Indonesia, despite
reasonable maternity leave entitlements for formal sector workers, there are several laws that
discriminate against women. This includes tax and inheritance laws, as well as lack of legislation or
penalties to protect against sexual harassment.
The report concludes with areas for further research including what drives female transitions in the
labour market. Ultimately, the aim is to provide the evidence base for Indonesia to increase
competitiveness and growth through women’s full economic participation.


List of Contents
1. Introduction ................................................................................................................................... 1
2. Overview of Gender Inequality ...................................................................................................... 2
2.1 Educational Inequality ............................................................................................................ 2
2.1.1 Education attendance and completion .......................................................................... 2
2.2 Labour Market ........................................................................................................................ 6
2.2.1 Labour Force Participation, Employment and Unemployment ...................................... 7
2.2.2 Employment Status (Formal/Informal) ......................................................................... 10
2.2.3 Industrial and Occupational Segregation ..................................................................... 11
2.2.4 Working conditions ...................................................................................................... 12
2.2.5 Wages ........................................................................................................................... 13
2.2.6 Migration ...................................................................................................................... 16
2.3 Finance & Entrepreneurship ................................................................................................ 17
2.4 Infrastructure ....................................................................................................................... 19
2.5 Health ................................................................................................................................... 20
2.6 Institutions & Laws ............................................................................................................... 22
2.6.1 Law in relation to families ............................................................................................ 23
2.6.2 Labour Laws .................................................................................................................. 23
2.6.3 Property Rights ............................................................................................................. 24
2.6.4 Political Representation ............................................................................................... 24
3. Stagnation of the female labour force participation in Indonesia: An age and cohort analysis .. 25
3.1 Introduction .......................................................................................................................... 25
3.2 Data and Methods ................................................................................................................ 26
3.2.1 Descriptive results ........................................................................................................ 28
3.3 General results ..................................................................................................................... 29
3.4 Age and cohort results ......................................................................................................... 31
3.5 Female Labour Force Participation Projection ..................................................................... 32
3.5.1 Model Performance ...................................................................................................... 32
3.5.2 Prediction of determinant variables ............................................................................. 33
3.5.3 Female Labour Force Participation Projection ............................................................. 34
3.6 Conclusions ........................................................................................................................... 35
4. Gender Wage Gap in Indonesia - a distributional analysis of the formal and informal sector .... 36
4.1 Introduction .......................................................................................................................... 36
4.2 Data and Method ................................................................................................................. 36


4.3 Decomposition Results ......................................................................................................... 42
4.3.1 Decomposition across the Wage Distribution .............................................................. 43
4.3.2 Cohort Analysis ............................................................................................................. 45
4.4 Conclusions ........................................................................................................................... 47
5. Conclusions and Future Research Agenda ................................................................................... 48
References ............................................................................................................................................ 51
Appendix 1: Blinder-Oaxaca Methodology .......................................................................................... 54
Appendix 2: Probit estimation of Female Labour Force Participation ................................................. 55
Appendix 3: Projections of the determinants of female labour force participation ............................ 56
Appendix 4: Gender inequality in unemployment rates ...................................................................... 59
A4-1. Data and methods ............................................................................................................ 61
A4-2. Results .............................................................................................................................. 61
A4-3. Age and Cohort Effects ..................................................................................................... 64
A4-4. Conclusion ........................................................................................................................ 65
A4-5. Methodological Note on the reliability of the Susenas unemployment rates ................. 66
Appendix 5: Gender wage gap along the distribution by status of employment ................................. 72
Endnotes .............................................................................................................................................. 80

List of Figures, Tables and Equations

Figure 1 Level of school completion by age cohort and gender, 2013 ................................................... 3
Figure 2 Years of education by age cohort and gender, 2013 ................................................................ 3
Figure 3 Literacy rates by region, gender and age cohort, 2013 ............................................................ 4
Figure 4 Indonesia PISA 2012 test results by gender ............................................................................. 5
Figure 5 Total Employment in Agriculture ............................................................................................. 6
Figure 6 Female Labour Force Participation by Country ........................................................................ 7
Figure 7 Labour force participation by gender and age group in 2013 .................................................. 8
Figure 8 Female Unemployment ............................................................................................................ 8
Figure 9 Underemployment by gender and Urban/Rural ...................................................................... 9
Figure 10 Informal Status of Employment by Gender .......................................................................... 11
Figure 11 Informal Status of Employment by Region in 2013 .............................................................. 11
Figure 12 Employment by Industry ...................................................................................................... 12
Figure 13 Workers Wage Female/Male Ratio ...................................................................................... 13
Figure 14 Blinder-Oaxaca Decomposition ............................................................................................ 14
Figure 15 Blinder-Oaxaca Decomposition by Sector of Employment .................................................. 16
Figure 16 Female’s age at their first marriage, 2013 ............................................................................ 23
Figure 17 Proportion of seats held by women in national parliaments (%) ......................................... 25
Figure 18 Age and cohort effects ......................................................................................................... 31
Figure 19 Observed and model predicted Female Labour Force Participation .................................... 33


Figure 20 Projection of Female Labour Force Participation in Indonesia ............................................. 35
Figure 21 Logarithm of the Hourly wages of male and female workers .............................................. 37
Figure 22 Histogram of the years of experience and education attainment by gender ...................... 37
Figure 23 Gender wage gap decomposition at the mean by sector of employment ........................... 42
Figure 24 Gender wage gap across the wage distribution by status of employment .......................... 44
Figure 25 Decomposition of the explained component of the gender wage gap across the wage
distribution by status of employment .................................................................................................. 44
Figure 26 Gender wage gap across the wage distribution in the formal sector by age cohort ............ 45
distribution in the formal sector by age cohort ................................................................................... 46
Figure 28 Gender wage gap across the wage distribution in the informal sector by age cohort ......... 46
distribution in the informal sector by age cohort ................................................................................ 47

Figure A4 - 1 Unemployment Rate in Indonesia (Modeled ILO estimate) ............................................ 59
Figure A4 - 2 Predicted probability of youth unemployment in Indonesia .......................................... 64
Figure A4 - 3 Predicted probability of youth unemployment for rural areas ....................................... 65
Figure A4 - 4 Predicted probability of youth unemployment for urban areas ..................................... 65
Figure A4 - 5 Total Unemployment Rate (% of total labour force) ....................................................... 67

Table 1 Enrolment status by gender for individuals aged 5 to 18 years ................................................ 2
Table 2 Type of Employees by Gender of Owner ................................................................................. 18
Table 3 Borrower’s characteristics, by gender ..................................................................................... 19
Table 4 Source of Non-Own Capital and Amount Borrowed from the Bank ........................................ 19
Table 5 Delivery attendance ................................................................................................................. 21
Table 6 Average Number of Children by age cohort ............................................................................ 22
Table 7 Summary statistics of labour force participation and explanatory variables .......................... 28
Table 8 Marginal effects of pooled sample .......................................................................................... 30
Table 9 FLFP determinats annual growth in percentage points ........................................................... 33
Table 10 Summary statistics of productivity characteristics ................................................................ 39
Table 11 OLS estimates of Wage by gender and sector of employment ............................................. 40
Table 12 Characteristics contribution to the total wage gap at the mean by sector of employment . 43
Table 13 An Analysis of Factors Determining Labour Market Gender Inequality in Indonesia ............ 50

Table A4 - 1 Unemployment Descriptive Statistics .............................................................................. 60
Table A4 - 2 Unemployment Marginal Effects - Total .......................................................................... 62
Table A4 - 3 Unemployment Marginal Effects Rural and Urban .......................................................... 63
Table A4 - 4 Labour Force Questions in Susenas and Sakernas ........................................................... 68
Table A4 - 5 Youth Descriptive Statistics by Year ................................................................................. 69
Table A4 - 6 Youth Unemployment Marginal Effects by Year .............................................................. 70

Table A5 - 1 Unconditional Quantile Regression Coefficients by Gender in the Formal Sector ........... 72
Table A5 - 2 Unconditional Quantile Regression Coefficients by Gender in the Informal Sector ........ 74


Table A5 - 3 Decomposition of the gender wage gap across the earning distribution ........................ 76
Table A5 - 4 Decomposition of the gender wage gap across the earning distribution for people aged
15 to 29 ................................................................................................................................................ 77
30 to 44 ................................................................................................................................................ 78
45 to 64 ................................................................................................................................................ 79

Equation 1 Labour force participation ................................................................................................. 27
Equation 2 Trend prediction of determinants of FLFP ......................................................................... 33
Equation 3 Wage equation ................................................................................................................... 38
Equation 4 Blinder-Oaxaca Decomposition .......................................................................................... 54
Equation 5 Youth Unemployment Probit Model .................................................................................. 61


1. Introduction
This report presents a general overview of the state of gender inequality in Indonesia. The Global
Gender Gap Report2 (2014) prepared by the World Economic Forum identifies inequality in economic
participation and opportunity for women as the most significant gender inequality challenge for the
country. The Indonesian economy has undergone dramatic change over the last few decades.
Indonesia achieved middle income status in 2004 and high growth also rapidly reduced poverty from
23 percent of the population in 1999 to 11 percent in 2016. The share of manufacturing and services
in the economy is growing, and agriculture declining (although still at a high level overall). Yet one
area that has not changed is the participation of women in the labour market. Economic participation
will thus be the main focus of this study.
The report contains three main parts. First, we present a general review of different aspects of gender
inequality. We examine the different facets of gender inequality in the following order:
i. Educational inequality
ii. Labour market inequality
a. Labour force participation
b. Employment status (formal/informal)
c. Industrial and occupational segregation
d. Working conditions
e. Gender wage gaps
f. Migration
iii. Entrepreneurship and Finance
iv. Infrastructure
v. Health inequality
vi. Institutions and Laws
We then present two pieces of analytical work. The first focuses on the main drivers of female labour
force participation (FLFP), exploring the factors that have contributed to FLFP remaining unchanged
over the last two decades. The second examines the drivers of the gender wage gap and examines
how these drivers differ across the distribution of wages in the formal and informal sectors.
We conclude with a section identifying the most important inhibitors of gender equality and suggest
areas for future research.3

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2. Overview of Gender Inequality
2.1 Educational Inequality
Education is recognised as key to reducing poverty in developing countries and is a significant factor
in determining wage gaps between men and women. While in the past there were various reasons for
lower levels of female enrolment in education in Indonesia, in particular, distance from schools and
early marriage (UN, 2003), gender equality in education in Indonesia has increased markedly over
recent years to approach parity (ADB 2006).
2.1.1 Education attendance and completion

Women’s educational achievement in Indonesia has made significant progress toward equality with
men at all levels of education (Buchori & Cameron, 2007; UNICEF, 2010). The gap between enrolment
and attainment between men and women has narrowed to the point of disappearing and there does
not appear to be a significant ‘son preference’ for education in Indonesia (Kevane & Levine, 2000),
although there is some evidence that in hard time families will cut expenditure on girls’ education
before cutting educational expenditure on boys (L. A. Cameron & Worswick, 2001).
Table 1 presents figures from the 2013 Indonesia’s National Socio-Economic Survey (Susenas) showing
that there is very little difference between school attendance for girls and boys in both urban and rural
areas. Girls’ attendance is slightly higher than boys’.
Table 1 Enrolment status by gender for individuals aged 5 to 18 years
Urban Rural
Male Female Total Male Female Total
In school 80% 81% 80% 77% 78% 77%
Not currently attending school 9% 8% 8% 12% 11% 11%
Never attended schooling 11% 11% 11% 11% 11% 11%
Total 100% 100% 100% 100% 100% 100%
Source: Authors calculations. Susenas 2013.
This is a relatively recent phenomenon so while for younger women there is very little gender
differential, older women have lower education levels than their male counterparts. Using the
Indonesian Family Life Survey data and logistic regression analysis, Zhao (2006) found that women in
older cohorts were significantly less likely to have attended primary school, but this was not seen in
younger cohorts (born after 1973). The larger gender gap in education amongst older cohorts can be
seen in Figure 1 below which presents data from the 2013 Susenas.

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Figure 1 Level of school completion by age cohort and gender, 2013
Source: Susenas 2013.

The larger gender education gaps in older cohorts can clearly be seen in Figure 2 which presents
average years of education by gender for urban and rural areas separately. In both urban are rural
areas educational parity has been attained for cohorts aged 29 and below.

Figure 2 Years of education by age cohort and gender, 2013
The attainment of gender equality in education is a nationwide achievement. This is true even in the
outer regions of Java and Bali as can be seen in Figure 3.

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Figure 3 Literacy rates by region, gender and age cohort, 2013
A number of studies report gender gaps in literacy rates. Haidi (2004) finds that the rate of illiteracy
was twice as high for women than for men: 6.26% compared to 13.85%. Azzizah (2014) also finds a
gap between female and male literacy which varies by region. In their examination of formal

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employment and literacy, Gallaway and Bernasek (2004) conclude that women are underrepresented
in occupations that are correlated with literacy. It seems that the literacy gap is however also
constrained to the older cohorts. Figure 3 above shows that in all regions, there is equality across the
genders with regard to literacy in the younger cohorts.
Azzizah (2014) focuses on the population who have never attended school. He finds that women are
more likely to have never attended school compared to men and that this gap is bigger in rural areas
than in urban areas. Indonesia’s patrilineal system and the emphasis on women’s family
responsibilities is evident in the reasons given for not attending school, in particular an emphasis on
getting married and a requirement to take care of the family (Azzizah, 2014). Rammohan and
Robertson (2012) using the Indonesian Family Life Survey finds female educational outcomes are
significantly worse for females from provinces with patrilocal norms (as opposed to matrilocal or
neolocal norms). These findings may again reflect persisting gaps in the older cohorts. Table 1 above
using the nationally representative Susenas data finds no gender differences in having never attended
school among those under 25 years of age.
Another important aspect of education equality is equality in the quality of education received. One
of the main challenges Indonesia faces in terms of education is its low quality. Looking at the result of
PISA test scores in 2012, Indonesia was ranked 60 out of 61 countries in mathematics. Compared to
other countries of the region, Indonesia underperforms. Indonesian children aged 15 years have an
average score of 375 compared to average scores of 573 in Singapore; 511 in Vietnam; 427 in Thailand;
and 421 in Malaysia4. In science and reading, Indonesian scores are very low as well, with an average
score of 396 and 382, respectively.
Figure 4 Indonesia PISA 2012 test results by gender

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Figure 4 shows the PISA performance of Indonesian students in maths, science and reading by gender
in 2012. Level 6 is the level attained by top performers. Level 1 signifies a relatively poor performance.
Around 75% of Indonesian boys and girls perform at level 1 or lower, representing a very low
achievement for both genders. In science, the country’s performance is slightly better, again with no
gender gap. Reading skills is where there is the biggest proportion of children in level 3 (close to an
average performance), with girls outperforming boys. This gender difference is widely observed
around the world with women tending to perform better than men in reading tests.
2.2 Labour Market

The Indonesian economy has been growing steadily over the last few decades (with the notable
exception of the period following the 1997 financial crisis). Economic growth has been reflected in
significant changes in the Indonesian labour force. The labour force is now significantly more
urbanised, less agricultural and better educated than it was three decades ago. For example, While
in 1970 26% of the labour force was in urban areas and 74% in rural areas by 2007 the composition
was 41% urban and 59% rural (Chowdhury, Islam, & Tadjoeddin, 2009).
Figure 5 Total Employment in Agriculture

Labour force participation in Indonesia has increased at a faster rate than the working age population.
The age composition of workers has changed – with younger workers now constituting a smaller share,
possibly because they are studying for longer. These changes and evolving societal norms have
affected the experiences of working women – their ability to find work, the type of work they do and
the wages they receive. In this section, we first examine female labour force participation over time
and its relationship with employment, unemployment and underemployment. Next, we look at the
formality and informality of employment including some comparisons by industry and regions. Then
we look at the gender gap by industrial sector and occupation. We also look at working conditions as
these have changed with Indonesian growth and urbanization. Then we look at gender inequalities in
wages, separating rural and urban areas and examining changes over time. We also present the
findings in the literature from Blinder-Oaxaca decompositions of wages that seek to estimate the
extent to which the gender wage gap is explained by the different characteristics of men and women
and to what extent it is due to differential treatment of the genders i.e. discrimination. Finally, we look
at international migration.

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2.2.1 Labour Force Participation, Employment and Unemployment
The 2014 World Development Indicators show 51.4% of Indonesian women aged 15 and above
participating in the labour force (either working or looking for work). This is low by international
standards. Figure 6 presents female labour force participation rates for countries in the region (from
Cambodia with the lowest GDP/capita to Malaysia with the highest), and Australia, the UK and the US
for comparison. Vietnam, similarly a lower-middle income country, has a corresponding rate of 73.0%.
Thailand, classified as a middle income country, has a female labour force participation rate of 64.3%.
The participation of Indonesian women in the labour market is clearly low in relation to similar
countries and its level of development.
Figure 6 Female Labour Force Participation by Country
Source: World Bank, 2013.
Further, female labour force participation has remained relatively stable over the past two decades.
It increased only very slightly from 50.2% in 1990 to 51.4% in 2013. Male participation increased at a
higher rate over this period, from 81.1% to 84.2% (Chowdhury et al., 2009). Female participation is
less than two-thirds of the male equivalent.
Married women and women with more dependent children have the lowest participation rates
(Comola & de Mello, 2012). Not surprisingly, women’s labour force participation declines during their
most fertile years. Van Klaveren, Tijdens, Hughie-Williams, and Martin (2010) show that while male
labour market participation is highest in the age range of 35-49 years, for females it is highest in the
post-child-rearing years (ages 45-59). This is consistent with calculations using data from Susenas from
2013 as shown in figure 7.

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Figure 7 Labour force participation by gender and age group in 2013
Cepeda (2013), in an analysis for the World Bank, uses information from the Indonesian National
Labour Force Survey (Sakernas) 2009 to show that young single women aged 15 to 24 have the highest
rate of participation compared to other marital categories in this age range. The aggregate drop in
participation on marriage in this age range is an enormous 37.7 percentage points. Interestingly the
biggest drop is among married women without children, and after the first child the reduction
decreases per each additional child. One of the suggested explanations for this is an anticipatory effect.
As women get married they expect to have children immediately so they stop working even before
pregnancy.5 From age 25 to 64, divorced and widowed women with children are the ones with the
highest labour force participation.
Figure 8 Female Unemployment

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Women’s labour force participation decisions however reflect a combination of marital and socio-
economic status, Alisjahbana and Manning (2006). 6 Poorer married women are more likely to
participate than married women in non-poor households. Taniguchi and Tuwo (2014) find that higher
educational attainment is positively associated with the decision to participate in the labour market.
Although female employment in Indonesia has also been slightly increasing since 1990, Chowdhury et
al. (2009) show that the share of female employment in total employment has decreased from 38.7%
to 35.1% between 1990 and 2006, compared to male employment which increased from 61.3% to
64.9%.7 This is a result of greater increases in males’ labour force participation relative to females’,
and female unemployment having increased over this period more than male unemployment. In 2006
the unemployment rate was 13.4% for females and 8.5% for males. This has however improved since
with 6.7% of women and 5.7% of men being unemployed in 2012.8 Van Klaveren et al. (2010) show
that unemployment affects mostly young and highly educated females, as presented in Figure 8.
Further, Alisjahbana and Manning (2006) find that better-off women are more likely to be unemployed
with poorer women being more likely to be underemployed (working but wanting to work more). This
reflects that better off women can afford to stay unemployed for longer periods while poorer women
will take whatever work they can find, often in the agricultural and/or informal sectors.
Figure 9 shows that underemployment in 2013 is higher for women than for men in all geographic
regions.9 41% of employed women are underemployed compared to 25% of men (this could include
voluntary underemployment) and almost 57% of women in rural non Java-Bali provinces are
underemployed compared to 37% of men. These differences in the number of hours worked by
women will consequently affect average monthly wage income. It is calculated that underemployment
results in gender differences in monthly wage income for formal workers of 28.5% and for informal
workers of 50.5% (Cepeda, 2013).
Figure 9 Underemployment by gender and Urban/Rural

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Greater underemployment amongst women is also found to be associated with age and urban areas.
Around 20% of young, female workers in poor urban households worked less than 35 hours and were
searching for more work. Taniguchi and Tuwo (2014) examine the relationship between
underemployment, marital status and education. They find that marriage decreases the probability of
underemployment. Higher education attainment increases the probability of full employment and
moderate (as opposed to severe) underemployment. The strongest association is with increases in
underemployment.
2.2.2 Employment Status (Formal/Informal)

One reason unemployment rates are relatively low in Indonesia is that unemployment is
“unaffordable” to poor households and the informal sector expands to accommodate those who
cannot find formal sector jobs. Informal jobs are low average productivity and low quality (low pay,
no social security, low stability and sometimes unsafe conditions). Economic growth has resulted in
growth in formal sector jobs. The formal sector was estimated to have been growing at a rate of 5.8%
prior to the 1997 financial crisis. It has since been growing at a slower but not insubstantial rate.
Chowdhury et al (2009) estimate the formal sector to have grown at 2.2% since the crisis through to
2008 and the rate of growth has increased further since then.10 We calculate that in 2013 the informal
sector is however still estimated to constitute 75% of total employment.11
The gender difference in informality of employment has shrunk over time. In 1990 the percentage of
working women who were employed in the informal sector was 10 percentage points higher than for
men. This gender difference had decreased to 7 percentage points by 2006.12 Hence, in spite of the
increase in education levels amongst women, women continue to be concentrated in informal jobs.
This difference is driven mainly by the proportion of female unpaid and casual workers, which is 3 to
1 compared to males. Marriage and dependent children increase the probability of being an unpaid
female worker (relative to being a paid worker in the informal sector) and higher educational
attainment decreases the probability, Comola and de Mello (2012). Similarly Priebe, Howell, and Sari
(2014) show that poverty is associated with the sector of employment. They find that 80% of the
women in the poorest households work in the informal sector compared to 34% of the wealthiest
women. Within both the poorest and wealthiest categories men’s participation in the informal sector
is about 5 percentage points less than women’s.
As shown in figure 10, agriculture and fishing is the sector with the highest informality for both males
and females. In 2013 the agricultural/fisheries sector accounted for about 34.9% of total employment
and 32.8% of total female informal employment. If we restrict our attention to paid workers in the
informal sector, women are most likely to be working in housekeeping, as homeworkers and in small
microenterprises, where wages, working conditions and job conditions are typically poor (Van
Klaveren et al., 2010).

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Figure 10 Informal Status of Employment by Gender
As different provinces have different levels of development and different employment markets, we
also present informality by province in Figure 11. Bali and NTB-NTT have the lowest differences in
informality by gender across all regions. Gender differences in the extent of informality are larger in
urban areas.
Figure 11 Informal Status of Employment by Region in 2013
2.2.3 Industrial and Occupational Segregation

Indonesia’s economic boom in the 1980s and 1990s led to a decrease in work force participation in
the agriculture sector from 66% in 1971 to 41% in 1997 (Sugiyarto, Oey-Gardiner, & Triaswati, 2006).
However, women were under-represented in the shift from agriculture to manufacturing. This was
mainly due to the level of education and the type of skills that were required for those jobs. Low

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educational attainment often excluded women from accessing jobs in manufacturing. However, as the
gender gap has been shrinking (as discussed above) and migration from rural to urban areas has
continued, the total participation of women and men in the agriculture sector has decreased, while
participation of both men and women has increased in the manufacturing sector and the relative
participation by gender has become more similar. See Figure 12.13
By 2007, 58.1% and 58.9% of working women and men, respectively, were working in non-agricultural
sectors. The service and trade and retail sectors have also become larger during this time with women
increasing their share of employment in these sectors. Cepeda (2013) shows that administrative and
managerial; and clerical and related occupations are mostly dominated by men. Women’s
participation in those occupations is 18.0% and 40.4%, respectively. Traditionally those occupations
are associated with higher wages, which implies that the share of the wages in the hands of women is
very low. Other occupations where male participation is almost double or higher are production and
transport and agriculture and related activities. Services, professional, technical and sales are
occupations where both genders participate. As mentioned below, services and sales are occupations
that usually are on the lower range of wages and require long hours in the job.
Figure 12 Employment by Industry
2.2.4 Working conditions

Information on working conditions in Indonesia is limited. Van Klaveren et al. (2010) examine the
number of hours per weeks worked by gender, disaggregated by status of employment and industry.
Even though the average number of weekly working hours is similar for males and females, 42.8 and
38.2, a larger proportion of men work excessive hours (defined as more than 48 hours per week) -
31.8% for males compared to 24.5% for females in 2009. 14 Economic growth has coincided with
shorter working days and reduced the differential between men’s and women’s working hours. In
2003 around 50% of all males worked longer than 48 hours compared to 41% of females. Average
hours of work for females are less than males across all industries.
The longest hours being worked for men are in the self-employed sector. The sectors with the longest
working hours for women are housekeepers; wholesale and retail trade; and hotels and restaurants.
Unlike the national average, in these particular female-dominated industries, the number of hours
worked has increased from 2000 to 2008.

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Working hours are just one facet, and possibly not the most important, of working conditions.
Pinagara and Bleijenbergh (2010) argue that women face a disadvantage in negotiation in Indonesia.
This reflects gender roles that are driven to some extent by religious views and patriarchal norms.
Perceptions of gender roles affect hiring rates, the potential support women can access and the
bargaining power they have to advocate for better conditions at work. Women generally have poorer
access to workers unions, fair work agreements and contracts. For example, although Foreign Direct
Investment (FDI) has increased women’s job opportunities particularly in manufacturing, FDI in
export-oriented industries provides incentives for employers to offer more precarious conditions of
employment in order to reduce fixed costs and increase international competitiveness (Siegmann,
2007). Lack of support structures like child care reduces the opportunities for participating in the
labour market. Women face cultural, social, economic and religious barriers to employment and fair
conditions in employment. This may influence the way younger generations of women perceive their
labour market prospects and affect their educational, occupational and employment choices. This
reproduces and prolongs the segregation of jobs by gender and results in women being over-
represented in low level jobs with minimal decision-making and few visible safety measures that make
women more vulnerable than men (AusAid, 2012; Blackwood, 2008; Elliott, 1994).
2.2.5 Wages
The majority of studies that examine gender inequality in the labour market focus on wage inequality.
There is a large and growing economic literature looking at the causes of the wage gender gap in
different countries. The indicators of gender inequality discussed above - labour force participation,
employment and unemployment gender ratios, sector and status of employment – also feed into the
wage gap. The gender wage gap ultimately reflects differences between men and women in education,
training and skills, experience (reflecting reproductive choices), occupational choice, employment
status, labour market choices based on social expectations, and discriminatory hiring and other
practices. Methods for estimating the contribution of these different factors and studies that do so
will be discussed below.
Figure 13 presents the female/male ratio of average hourly wages. The average hourly wage of
females in the formal sector is somewhere between 70% and 80% of that of males.15 This looks to
have been improving over time. The figures for the informal sector however show a worsening
situation. Because of data limitations in the informal sector, most studies that attempt to explain the
raw wage gap have focused on the formal sector.
Figure 13 Workers Wage Female/Male Ratio

13


Gender wage gaps persist across education levels but are smaller amongst the better educated.
Females who did not graduate from primary school earn only half of that earned by similar males and
females who have graduated from senior secondary earn on average 79%. Feridhanusetyawan et al.,
(2001) find that the gender wage gap has an inverted U shape with age reaching the maximum by ages
40 to 50. This is likely to be due to cumulative differences in the amount of work experience achieved
by females compared with males – as a result of periods of female non-participation in employment
due to child birth and child care.
Women earn less than men across all occupations and sectors, and this is true at all levels of education,
Taniguchi and Tuwo (2014). The wage gap does vary however by industry with the biggest differences
being found in agriculture and services in private households where wages are the lowest and women
earn around 64% of the male average wage. In the highest paying sector - finance – where wages are
almost double the average wage; women earn 6.2% less than men. In the most female-dominated
sectors - wholesale-retail and hotels-restaurants - even though there is a relatively high average level
of education, the hourly wage rates are among the lowest due to the longer working days (ADB, 2006;
Van Klaveren et al., 2010). Consistent with these findings, Alisjahbana and Manning (2006) find that
the average monthly earning of employed females to males (aged 25-59 years) is lowest for the
poorest households (one half compared to an average of two thirds across all socio-economic groups).
The Blinder-Oaxaca decomposition is the most widely used methodology for determining how much
of the gender wage gap is due to differences in observable characteristics between men and women
(for example, educational attainment, years of experience, occupation) and how much seems to
reflect the mere fact that the worker is female, not male, and which is normally designated as
discrimination. The Blinder-Oaxaca methodology is explained in more detail in appendix 1. Although
very widely used across the world, as far as we are aware, there are only a few studies that attempt
to determine the portion of the gender wage gap due to observable characteristics and the portion
left unexplained in the Indonesian context.16
Some of the explored explanations for those differences are differences in education, experience, age,
head of household characteristics, industry, poverty level, rural/urban, employment status
(formal/informal) and the effect of foreign direct investment and urbanization (Alisjahbana & Manning,
2006; Cepeda, 2013; Feridhanusetyawan, Aswicahyono, & Perdana, 2001; Pirmana, 2006; Siegmann,
2003, 2007; Taniguchi & Tuwo, 2014).
Figure 14 Blinder-Oaxaca Decomposition

14


The results of these studies suggest that the raw wage gap is still high but has decreased over time.
The proportion of the gender wage gap that is unexplained (the discrimination component) has
however increased over time as presented in Figure 14.17 This finding emerges from the comparisons
of these studies and appears robust even though the studies use different measures of wages,
different specifications and different sources of information. These differences explain some of the
variability in the summary presented below.
Feridhanusetyawan et al. (2001)18 is the first study of which we are aware that decomposes the gender
wage gap. They use the 1986 and 1997 Sakernas. and estimate that the raw wage gap in the formal
sector to be about 0.45 in 1986 and 0.35 in 1997. They present estimates for urban and rural areas
separately. In 1986 the raw gap was higher in urban areas (0.53) than in rural areas (0.39). The
proportion of the gap attrubuted to discrimination was however lower in urban areas (46%) versus
56% in rural areas. By 1997 they estimate that the raw gap had decreased to 0.35 and 0.33 for urban
and rural areas respectively and that the unexplained proportion represented a smaller portion - 30%
and 42%, respectively.
Pirmana (2006) pools data from the 1996, 1999, 2002 and 2004 Sakernas and calculates a raw
difference between male and female real monthly wages of 40%. Forty-two percent of this difference
(16.8 percentage points) is found to be explained by differences in endowments (education level,
experience, socio-demographic characteristics, economic activity and sector and local and regional
characteristics) and 58% (23.2 percentage points) is unexplained or due to discrimination. That means
that a woman with similar characteristics to a man will on average be paid 23% less.19
Taniguchi and Tuwo (2014)20 use the 2010 Sakernas data. They report a raw wage gap of 30.8% for
workers with full employment status. They examine the role of age, hours worked, educational
attainment, work occupation, industry and geographical location. They find that the vast majority of
the wage gap 93.2% (28.7 percentage points) is due to discrimination with only 6.8% (2.1 percentage
points) due to differences in characteristics. Although the gender wage gap is higher in urban areas,
the discrimination component is larger in rural areas.21
A limitation of the studies above is that they only analyse women with formal employment status.
Women certainly face wage discrimination in the formal sector but most women work in the informal
sector. Cepeda (2013)22 is the only study that examines the determinants of the wage gap in both the
formal and informal sector. As shown in Figure 15 the informal sector is found to have not only a
higher raw wage gap but also a larger discrimination effect. The gender gap has decreased over time
in both the formal and informal sectors but the unexplained proportion of the gap has increased. In
the formal sector the unexplained proportion has risen from 33% of the total gap of 34.9% in 2001
(11.6 percentage points) to 45% (9.86 percentage points) in 2010 and in the informal sector has
increased from 75% (35.1 percentage points) to 84% (30.5 percentage points). When looking at the
drivers of those differences, she shows that differences in educational attainment below tertiary
education explain a substantial amount of the wage gaps in the formal and informal sector.
Additionally, the author provides evidence of “sticky floors” being a factor in the setting of women’s
wages. For both the formal and informal sector, the biggest gender wage gap was found in the lowest
two deciles of the wage distribution and then it decreases over the rest of the distribution.

15


Figure 15 Blinder-Oaxaca Decomposition by Sector of Employment
Additional limitations of the studies discussed above are 1) that the use of the Sakernas survey in many
of the studies limits the ability to examine the effect of having children on labour market outcomes as
it does not contain information on fertility. It is thus not possible to accurately control for career
interruptions due to child-raising. This will lead to an over-estimate of the gender-wage gap due to
discrimination23; 2) even those wage differences due to observables e.g. educational attainment, may
reflect discrimination. For example women may choose to invest less in education because they
anticipate they will be paid less in the labour market. Similarly, observable differences in experience
and education can reflect women’s reactions to cultural norms which result in a shorter and more
discontinuous working life. Occupational choice may similarly reflect these socio-cultural factors. If
the control variables reflect discrimination, our estimate of the discrimination component will
underestimate the true extent of discrimination.
2.2.6 Migration
Migration to foreign countries for work is an important source of income for women in Indonesia and
migration rates have increased over the last few decades, both legal and illegal.24 The most popular
destinations are Malaysia and the Middle East. Other Asian countries, for example, Hong Kong, Taiwan
and Singapore are also becoming popular destinations. Most female migrant workers work in the
informal sector as domestic helpers (World Bank, 2010a). In 2011 women made up to 75% of the
Indonesian foreign workers (World Bank, 2014). This was prior to the Indonesia’s moratorium on
domestic work in Saudi Arabia which was imposed in 2011 and is ongoing. Women’s share of total
foreign workers has fallen since but they still outnumber men. In 2014 about 54% of total Indonesian
overseas migrant workers were female. It is expected that the proportion of women in total migration
will decrease further after the government recently announced (May 2015) to extend the ban on
domestic workers to twenty-one Middle Eastern countries from August of this year.

Most of the migrant women come from poorer, rural regions of Indonesia. Women and men seek to
migrate abroad with the expectation of earning wages that are not attainable in poor rural areas
(AusAid, 2012). Rural women account for 44% of total Indonesian international migration, although
their share has dropped as a result of the moratoria (World Bank, 2014). Poverty, unemployment,
underemployment and lack of formal education (particularly true for older and poorer women) are
the main driving forces behind this high rate of migration.

16


Protection for female migrant workers (in Indonesia prior to departure and on return, and in the
destination country) is limited. Consequently, mistreatment and even serious physical abuse by
employers is not uncommon. 25 There is a real need to formalise, protect and regulate overseas
employment (Silvey, 2004). There have been some efforts to improve the situation but Indonesia’s
system for labour migration still works poorly and channels of coordination between the government,
the recipient governments and migration agencies are still to be improved (Bazzi & Bintoro, 2015).
Most of the workers lack access to legal contracts, financial markets and financial literacy, training and
in country support.26
While the moratoria on domestic work in the Middle East was announced as a measure to protect
Indonesian women from exploitation while overseas, in practice it will reduce the opportunities for
poorer women, particularly in rural areas, to find gainful employment and a path out of poverty. It will
restrict many women to the Indonesian labour market which, as seen above, often discourages
women from working and treats them inequitably.
2.3 Finance & Entrepreneurship

It is estimated that in Indonesia only 23% of Small and Medium-Sized Enterprises (SMEs) are owned
by women (Asia Foundation, 2013). Systematic barriers to entrepreneurship prevent women from
economic opportunities worldwide. This can not only limit women’s opportunities for starting
businesses but can also confine businesses which are established to remain very small in scale, often
operating only in the informal sector.
Women’s underrepresentation as entrepreneurs in Indonesia is attributed to various factors.

Tambunan (2009) identifies obstacles such as low levels of education and fewer training opportunities
for women, household responsibilities (especially for rural women), legal, cultural or religious
constraints, and a lack of access to formal credit and financial institutions. A lack of time to complete
income generating activities due to caring or unpaid roles can also leave women with fewer
opportunities to develop their own livelihoods and can result in vulnerability to insecure or
discriminatory situations.
Using information from the 2014 Micro and Small Manufacturing Industries Survey (IMK) we find that
around 45% of manufacturing business owners are female. The nature of men’s and women’s
businesses however, appears to differ dramatically. Women’s businesses are smaller in scale and
more informal. Table 2 shows that while 30% of businesses owned by men employ paid (mainly male)
workers, only 8% of women’s businesses do. Further, men’s businesses have been formalising at a
faster rate than women’s (an increase from 17% of male businesses hiring paid workers in 2009 to 30%
in 2014 compared to an increase from 3% to 8% for women over the same period). In contrast, female
businesses continue to predominantly be staffed by unpaid female labour. Eighty-four percent of
women’s businesses rely on unpaid female workers. These findings are consistent with the
observation that many women who do become business owners in Indonesia do so out of necessity
as a means supplementing household income when the husband’s income is not enough, Tambunan
(2014). Hence, there is often a difference in the aspirations of men and women for their businesses,
with self-employed females having a lesser desire to expand and/or formalize their businesses.

17


Table 2 Type of Employees by Gender of Owner
Total Owner is a male Owner is a female

2009 2014 2009 2014 2009 2014
Proportion of paid Males 8% 14% 14% 24% 1% 2%
proportion of paid Females 3% 6% 3% 6% 2% 6%
Proportion of unpaid Males 35% 32% 57% 52% 9% 7%
Proportion of unpaid Females 54% 48% 26% 18% 88% 84%
Source: IMK 2009 and 2014. Authors’ calculations
For those women who do seek to expand their business, access to, and control of financial assets have
been shown to be strongly linked to women’s decision-making power within the household (AusAid,
2012). Unlike in many other developing nations, microcredit in Indonesia has not been specifically
targeted towards women (ADB, 2006). A qualitative meta-analysis conducted by Vong et al. (2013)
found that inequality in access to microfinance reflects differences in educational attainment and
cultural norms rather than characteristics of microfinance itself. While it is often asserted that women
are less likely than men to use financial institutions, or formal banks in particular, Dames (2012)
similarly finds that it is education rather than gender that is an important determinant of whether
Indonesians access credit.27 The gender gap in education has largely closed but a lack of education
could remain a barrier to finance for older women. Many studies link financial participation to
education, but also more specifically to financial education. In a later study Vong and Song (2015) cited
surveys finding almost half of Indonesian women ‘admitted they are very inexperienced in financial
services and their lack of understanding of financial products causes difficulties for them to formulate
sound financial decisions’. Access to credit is noted to be more of an issue for rural women and is
particularly related to property ownership rights and, consequently, the ability to offer collateral
against loans. The cost of bank transactions is also found to explain the gap between female and male
financial participation. A ‘one-stop platform’ for transactions to reduce the opportunity cost of time
such as childcare, transportation and account identification processes’ is recommended, Vong and
Song (2015).
There seems to be a disconnect between the findings of small scale studies which document
disadvantage for women in accessing finance in Indonesia, and the findings of much larger, more
representative surveys which find little evidence on gender differentials, making this an area worthy
of further work. AusAid (2012) emphasises the importance of gender considerations when formulating
financial inclusion policy, but World Bank (2010b) notes they have observed few significant differences
in gender-disaggregated indicators related to financial inclusion, such as informal savings and having
a bank account. World Bank (2010b), using data from two surveys28 on access to financial services,
also finds few significant gender differences in access to financial services. There were no significant
gender differences in borrowers’ characteristics or the institution they choose to borrow from (see
Table 3). They did however find gender differences in the reasons given for having a bank account.
Women were more likely to have a bank account in order to save for future needs, whereas men were
more concerned about their ability to obtain a formal loan.

18


Table 3 Borrower’s characteristics, by gender
Source: World Bank (2010b).
Most female entrepreneurs in Indonesia use personal and family savings as the most common source
of capital, Asia Foundation (2013). This is however also true, although slightly less so, of males. The
2014 IMK data show that 88% of women financed their business with their own capital compared to
82% of men. Table 4 shows that for owners who used other sources for capital, 37% of males used a
bank loan compared to only 12% of females. Furthermore, if women do borrow for their businesses,
the amount borrowed is smaller. Of respondents who did not use a bank loan as a source of capital,
62% of the women reported that the main reason was that they were not interested in borrowing
(compared to 45% of men).29
Table 4 Source of Non-Own Capital and Amount Borrowed from the Bank
2009 2014
Male Female Male Female
Bank 25% 4% 37% 12%
Cooperative 3% 3% 4% 6%
finacial institution (no bank) 2% 1% 3% 3%
Venture Capital 0% 0% 0% 0%
Borrowing from Partners - - 7% 16%
Borrowing for people 44% 42% 31% 38%
Family 10% 6% 10% 6%
Other 16% 44% 8% 18%
Total 100% 100% 100% 100%
Source: IMK 2009 and 2014. Authors’ calculations
The IMK data do detect a gender gap in access to finance, although maybe not as large as may have
been expected, at least in the manufacturing sector. However, it is important to note that the IMK
sample provides information only on people who have a manufacturing business and so may not
present a complete picture of access to finance in Indonesia. For example, we do not know how many
women (and men) wished to start a business but could not do so due to a lack of capital. To the extent
that more women than men could not start a business, the IMK data will under-represent the extent
of inequality in access to finance.
2.4 Infrastructure
The provision of infrastructure determines the ability of both men and women to produce output and
access jobs. This is true of the provision of energy - electricity and gas – which can be necessary to run
small businesses, and also transport infrastructure. The gendered impact of the provision of transport
infrastructure and services is an understudied area but one which is starting to receive more attention.
A number of studies have documented how women’s transport needs differ from those of men.30
Women have been found to be more dependent on public transport than men as men, as the main
breadwinners, are the ones who most often have primary access to any household vehicle e.g. motor
cycles, leaving the women in the household to travel on foot or by public transport. Women’s

19


transport needs also differ because they often have responsibility in the household for shopping,
caring for children and the elderly, while also possibly working to generate an income. Thus, while
men’s transport needs are well met by transport aimed at getting people to and from business centres
in peak periods, women’s needs differ. Women require services distributed more evenly throughout
the day with routing and ticketing that allows for more stops and stops in areas that allow for the
carrying out of household shopping and other chores.
Security on public transport is also of greater concern to women. The provision of women’s only
carriages goes some way towards reducing the opportunities for sexual harassment on public
transport but other measures, such as providing safe, well-lit and visible waiting areas also make public
transport more female-friendly. Like most places, the transport industry is male-dominated in
Indonesia, often leading to women’s needs being overlooked. There is a growing recognition that
greater gender balance is needed amongst transport planners and engineers if we are to see a
transport system that balances the needs of men and women.
Inadequate transport infrastructure limits the range of employment opportunities people can access
and is likely to have a disproportionately large effect on women given their greater reliance on public
transport and the need for safe and reliable transport that enables them to fulfil their employment
and household responsibilities. Although gender differences in transport needs have started to be
recognised (particularly in relation to urban transport), there is very little work on the impact of
transport infrastructure and female labour market participation. By providing physical access to jobs
and markets, transport infrastructure can play a potentially important role in boosting women’s
economic participation31.
2.5 Health
Gender differences in health status are important in their own right and also affect women’s ability to
participate in the labour market and their productivity. A lack of investment in women’s health has
long lasting consequences, affecting cognitive development, school progression and labour income.
Gender gaps in health early in life are likely to widen from childhood to adulthood. Gender gaps in
health – for example in infant and child mortality and morbidity – although found in many developing
countries, are not evident in Indonesia. There is some evidence that women have more limited access
to curative medical treatment than men (reflecting their lower capacity for payment) (ADB, 2006).
There is however not much information on women’s access to general health services. Mental health
is one area where women seem to be more in need than men. Using information from the
Indonesian Family Life Survey (IFLS) Friedman and Thomas (2009) find that women are more
likely than men to report feeling sad and anxious and having difficulty sleeping. They are also
more likely to report being in poor health. 13.6% of women 15-49 years suffer from a chronic lack
of protein and anaemia (JICA, 2011).
Indonesia does not perform particularly well in respect to reproductive health. Maternal mortality
rates are high (although decreasing) relative to similar countries. The 2013 maternal mortality rate
was 190 per 100,000 live births (falling from 450 in 1986 and 307 in 2000 (ADB, 2006)) while other
members of the region like Vietnam register only 47 per 100,000 live births.32 Maternal health services
in Indonesia are generally of low quality.

20


Table 5 presents the person who attended the first and the last delivery of women over time. When
examining the decisions of the same woman across time, we can see that from the first to the last
delivery more women were going to see a doctor or midwives and also fewer women went to
traditional healers or family members. This pattern is apparent in both, rural and urban areas. When
comparing across years, we can see that the proportion of women whose last delivery was attended
by a medical professional increased from 73% in 2007 to 85% in 2013. This increase is much stronger
in rural areas where the professional assistance at birth increased 16 percentage points, compared to
4 percentage points in urban areas. Although deliveries assisted by trained personnel have increased,
the maternal mortality rate is persistently high in Indonesia. The poor quality of care is the likely culprit.
Non-professional assistance still accounts for 23% of care in rural areas.
Access to contraception is also very limited for non-married women. Although the fertility rate has
been decreasing over time (Table 6), in 2004 the contraceptive prevalence rate was only 60% in 2004
(JICA, 2011) 33 and most of the methods were women biased, for example oral contraceptives and
injectables, as opposed to condoms.
A further area where little is known, is the health status of elderly women. Life expectancy at birth is
5 years higher for women than men (68.8 for men and 72.7 for women). This can be of particular
importance as aging requires specific health care and as female life expectancy is 5 years higher than
men’s, women are at greater risk of a lack of provision of services in old age. This is particularly true
for women in the poorest households, where 10% of households have a female household head and
the average age is 55.
Table 5 Delivery attendance
2007 2011 2013

Person who attended First Last First Last First Last
the delivery delivery delivery delivery delivery delivery delivery
Total
Doctor 12.32 13.64 15.44 16.88 16.61 18.21
Midwife 53.96 58 61.85 63.71 65.04 66.02
Paramedic 0.52 0.89 0.39 0.66 0.42 0.53
Traditional Healer 30.27 25.31 19.79 17.34 15.46 13.79
Family 2.69 1.91 2.33 1.24 2.34 1.37
Other 0.24 0.25 0.2 0.16 0.13 0.08
Total 100 100 100 99.99 100 100
Urban
Doctor 20.71 22.25 23.24 24.87 24.42 26.01
Midwife 64.25 65.81 65.82 65.48 66.89 66.44
Paramedic 0.39 0.64 0.32 0.54 0.45 0.39
Family 1.12 0.66 0.83 0.28 0.84 0.39
Other 0.13 0.13 0.12 0.1 0.11 0.07
Total 100 100 100.01 100 100 100
Rural
Doctor 6.11 7.27 7.9 9.15 9.12 10.73
Midwife 46.35 52.22 58.02 62 63.27 65.62
Paramedic 0.61 1.07 0.47 0.78 0.4 0.66
Family 3.86 2.83 3.79 2.18 3.78 2.32
Other 0.32 0.34 0.27 0.23 0.15 0.09
Total 100.01 100 100 100 100.01 100
Source: Susenas

21


Table 6 Average Number of Children by age cohort
Year
2007 2011 2013
15-19 0.5 0.5 0.5
(0.6) (0.6) (0.5)
20-29 1.3 1.2 1.2
(0.9) (0.9) (0.8)
30-39 2.5 2.3 2.3
(1.4) (1.3) (1.3)
40-49 3.5 3.3 3.2
Age
(2.0) (1.9) (1.8)

50-59 4.4 4.1 4.1
(2.5) (2.3) (2.3)
60-69 5.1 4.9 4.8
(3.0) (2.8) (2.7)
70 or more 5.3 5.2 5.3
(3.2) (3.1) (3.1)
Source: SUSENAS 2007, 2011 and 2013. Standard
Deviation in parenthesis.

2.6 Institutions & Laws

Commitments to improving and achieving gender equality can be demonstrated through laws,
national and regional policies as well as institutions. Indonesia ratified its commitment to the UN
Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) in 1984 and
has subsequently reconfirmed its position through its support of subsequent declarations such as
the Beijing Declaration (UN, 2003).
A number of labour laws in Indonesia deal directly with gender equality. For example, laws
governing maternity and menstruation leave. Others target the overall population like the
establishment of minimum wages. Many of these laws are not enforced. Those that are enforced,
have sometimes proven to have unforeseen negative consequences for women. For example,
Suryahadi, Widyanti, Perwira, and Sumarto (2003) find that the imposition of minimum wages
between 1998 and 2000 had a negative effect on the employment of low-skilled women from poorer
households. Similarly, it has been suggested that the maternity leave provisions enshrined in
Indonesian law act as a disincentive for employers to formally hire women. The effect of laws or
laws changes is an understudied area in Indonesia that could shed light on how to promote gender
equality in the labour market. For example, looking at the effect of minimum wages; menstrual,
miscarriage and maternity leave provisions; or the Equal Employment Opportunity strategy
implemented in 2003 on FLFP, status of employment and wage gaps.
Despite support for international conventions, some laws in Indonesia do not have equal impacts on
women and men. Some laws actively limit women’s independence. For example, Indonesian tax
regulations require married women to use the same tax file number as their husband (ADB 2006),
making it more difficult for married women to make independent financial decisions. Additionally,
the Civil Code requires husbands to assist women in signing contracts, removing women’s control

22


over their own financial transactions. Finally, there is a lack of legislation and hence protection for
women against sexual harassment (World Bank, 2016).
2.6.1 Law in relation to families

Documents proving head of the household status are required for female-headed households to
access government poverty relief programs and other entitlement programs as well as procuring birth
certificates for their children, which are required for state school enrolment. Women in poor families
however often lack such legal documents (such as divorce certificates, Alfitri (2012); or identification
cards, Lockley, Tobias, and Bah (2013)). Extensive legal reform in Indonesia has taken place to increase
women’s access to the religious courts in order to formally document their role as the head of the
household (Alfitri, 2012; World Bank, 2011). Such legal reforms were required as the cost of court fees
and transportation to access the courts was, and in some cases remains, beyond the means of the
poor (World Bank, 2011).
Although the legal age for marriage in Indonesia is 21 years old, with parental permission women can
be married as young as 16 years old, ADB (2006). Early marriage can lead to leaving school before
finishing, as many educational establishments will not accept married women, as well as adolescent
pregnancy and its associated risks (ADB 2006). Figure 16 presents the distribution of age at first
marriage. It shows a significant proportion of girls get married before the age of 18, particularly in
rural areas. The average age of marriage has been increasing very slowly from 19.5 in rural areas in
2007 to 19.77 in 2013.
Figure 16 Female’s age at their first marriage, 2013

2.6.2 Labour Laws

Labour laws are another, unintended source of discrimination against women. ADB (2006) suggests
that the high unemployment rate amongst Indonesia women may be the result of labour laws which

23


provide provisions for women suffering from menstrual pain to take leave as well as maternity and
miscarriage leave. Maternity leave provisions state that a female worker shall receive her wages in full
for the period of maternity leave (Van Klaveren et al., 2010) yet in practice women are dismissed
rather than afforded their three months maternity leave (ADB 2006). Elliott (1994) argues that even
though maternity leave provisions are strong, due to the nature of the work women are employed in
- low paid, unskilled, and seasonal – and the oversupply of labour for these positions, women can
easily be dismissed.
In the creation of labour laws after independence, Indonesia based many of their laws on colonial
legislation and in some cases enforced traditional gender ideologies (Elliott, 1994). In particular, the
author cites the exclusion of women from night-time work as one of the prohibitive aspects of the
Labour Act (1948). There have been legal attempts to promote equality of remuneration by gender;
such as the Equal Employment Opportunity strategy implemented in 2003. However the enforcement
of those regulations is not strong enough to be effective (Pinagara & Bleijenbergh, 2010). Indonesia
also lacks legislation to protect against sexual harassment in employment (World Bank, 2016).
2.6.3 Property Rights

Access to land and property rights form the productive basis of many households in parts of Indonesia
where small-scale agriculture is often the primary food and income source. Women’s access to land
or registration of the title in their name is uncommon, with the majority of marital property being
registered in the husband’s name (ADB 2006). Although joint land ownership is formally adopted in
the law and co-ownership is informally recognised, few land titles are held jointly.
Inherited property in Indonesia is allocated predominately according to Islamic law (ADB 2006), which
allocates greater proportions to sons rather than daughters; although there are some regions that
emphasise gender equality in inheritance as per adat traditions (as shown by responses to the
Indonesian Family Life Survey), Kevane and Levine (2000). Furthermore, there are regions, Java in
particular, where the youngest daughter fulfils the caregiving role to older parents and as such inherits
the parental home. In regions with matrilineal traditions the property is passed from mother to
daughter (Kevane & Levine, 2000), however this is not particularly common.
2.6.4 Political Representation

Female political representation is often seen as a way to ensure policy decisions are made with gender
equality in mind. The Government of Indonesia has set targets for women’s participation in parliament,
political parties and decision-making institutions, with legislation mandating 30 percent female
representation (JICA, 2011). However, these levels have not been achieved and are now a target of
the current National Mid-Term Development Plan. The Constitution of Indonesia promises equal
protection to all citizens, but the Indonesian local governments are male-dominated (Kevane & Levine,
2000). Figure 17 shows that, although increasing, the number of seats is below the government’s
target and also low by international standards. Other countries like East Timor, the Philippines and
Vietnam have 38.5%, 27.7% and 24.3% female representation in parliament, respectively.

24


Figure 17 Proportion of seats held by women in national parliaments (%)
Women’s voices are also underrepresented in corporate boardrooms (World Policy Analysis Centre
(2015); Credit Suisse (2014)). In 2013, only 5% of positions on company boards in Indonesia are held
by women. This compares unfavourably with the global average of 12.7% and, in comparison to other
countries in the region like Malaysia (11%) and the Philippines (12%).
Political power was radically decentralised in Indonesia in 2001, with significant decision-making
powers being transferred from the national government to district governments. The reintroduction
of traditional laws and institutions has been the most cited effect of decentralisation on women (Mahy,
2012). The ambitious transition to a decentralised system of governance has “unintentionally made
way for a number of local governments to advance their aspiration of public policies based on Shari’a
or Islamic law,” (ADB 2006, p28). Mahy (2012) explains that some of these local laws are particularly
discriminatory towards women in particular, not recognising the right of women to own property or
earn an independent income. Siahaan (2003) echoes this finding on the effect of decentralisation on
women, noting that although it has increased participation ‘it has been less encouraging to women’s
participation and [political] representation at the local level’.
3. Stagnation of the female labour force participation in Indonesia:

An age and cohort analysis34
3.1 Introduction
Indonesia now has the largest economy in the Association of Southeast Asian Nations and the 16th
worldwide (ADB, 2015). The continued economic development has meant rising average incomes,
changes in the sectoral structure of the economy (from agriculture to manufacturing and services) and
increasing industrialization and urbanization (Elias & Noone, 2011). Indonesia achieved middle income
status in 2004 and high growth also rapidly reduced poverty from 23 percent of the population in 1999
to 11 percent in 2016. In spite of the significant changes, the impact on the experiences of women in
the labour market appears to be rather muted. The 2014 World Development Indicators show
51.4 percent of Indonesian women aged 15 and above participating in the labour force (either working
or looking for work). This has remained largely unchanged over the past two decades which has meant
that the large gap between female and male participation continues and female participation remains
low relative to countries at a comparable stage of development in the region (see also ADB, ILO, and
IDB (2010)).

25


In section 2, we reviewed studies that were largely consistent in identifying the main drivers of female
participation. These include marital status, prevailing economic conditions and the level of educational
attainment. The main aim of this section of the report is to disentangle how the drivers of female
labour force participation in Indonesia have contributed to keeping female labour force participation
unchanged over the period 1996 to 2013. We do this by separating labour force participation into
components due to factors on the supply and demand side of the labour market – educational
attainment, marital status, fertility, household structure, distance to urban centres, main local
industries – and implementing a cohort analysis which separates out the effect of life-cycle factors
(age) on women’s labour market participation and cohort effects (changes in participation over time).
Understanding the constraints that women face in the labour market is essential in informing policies
aimed at addressing these constraints. Previous studies attribute this to gender differences in family
roles, child-caring and also cultural norms in relation to women’s traditional roles (Jayachandran,
2014). Increases in participation are likely to have flow on effects through female empowerment and
may affect other facets of the gender divide (e.g. political representation, having greater say over
household decisions and being less accepting of spousal violence). Improving female participation is
also important to help the Indonesian economy shift from a pattern of economic growth driven by
resources and cheap labour and capital to growth based on high productivity and innovation (ADB,
2015). This could help Indonesia avoid the middle-income trap and continue its economic
development into the future.
3.2 Data and Methods

The data used in this section is from two sources - the National Socioeconomic Survey (SUSENAS) and
the Village Potential Statistics (PODES).
The SUSENAS is a nationally representative survey conducted annually and typically composed of
about 200,000 households. Each survey contains a core questionnaire which consists of information
on all household members listing their sex, age, marital status, and educational attainment and
information on labour market activity, health and fertility.
The Susenas allows us to explore the role of child-raising in the decision to participate and the
availability of alternative child-carers in the household (primarily grandparents and other women who
could act as babysitters). We supplement the Susenas data with data from the PODES. This is a census
of all villages across Indonesia (approximately 65,000). We use the PODES for some demand side
characteristics of the labour market such as the distance to the nearest district office (to act as a proxy
for access to jobs) and the main source of income of the village.
• At the individual level, we control for if the individual is the household head, their marital
status (e.g. married, divorced, widowed or single) and the level of education achieved by the
individual as measured by their receipt of certificate (e.g. if the individual completed primary
school, lower secondary school, upper secondary school, or tertiary education).
• At the household level, we control for the number of people living in the household, the
number of females aged between 45 and 65 years in the household (excluding the female
respondent) who are potential babysitters, the number of elderly (defined as greater than or
equal to 65 years of age) females or males in the household and the number of children in the
household by age (the age groupings are 0 to 2 years of age, 3 to 6, 7 to 11, and 12 to 17).

26


• At the village level, we control for distance to the nearest district office and the main source
of village income. We also control for provincial unemployment rates (calculated from the
Susenas) to act as a proxy for the underlying economic conditions at that time.
A disadvantage of the Susenas is that it is cross-sectional so we cannot observe the same individuals
or households across time. But by using the Susenas from 1996, 2000, 2007, 2011 and 2013 survey
years, we can observe how the participation of different birth cohorts (groups of people born in the
same years) change over time. Using data covering such a long time period allows a close examination
of lifecycle (age) effects and trends over time (cohort effects) on female participation.
To estimate the determinants of female labour force participation we regress whether an individual
participates in the labour force or not (yi) on a set of potential drivers (xi) using a binary probit model.
That is, we estimate:
Equation 1 Labour force participation
$
yi= β0 + "%& !" # i + εi , y= 1 [y* > 0],
The vector of potential drivers (xi) includes those discussed above. On the supply side of the labour
market we control for marital status, if the individual is the household head and the highest level of
education achieved, household size, the presence of a babysitter or elderly men or women in the
household and the number of children at certain ages. On the demand side, we include distance to
the nearest district office and the main source of income in the village. We also control for geographic
differences using province dummies and the unemployment rate for each province.
Intuitively, the regression identifies the relationship between the control variable and labour force
participation. The magnitude of the effect is captured by the coefficient on the control variable (β).
Dummy variables are also included for the age of the individual at the time of the survey and their
year of birth. The age and cohort analysis will establish whether the younger cohorts behave
differently in relation to labour force participation compared to their older counterparts and the
extent to which the propensity to participate in the labour market has changed over time.
The coefficients (and associated marginal effects) on the age dummies capture how an individual’s
likelihood of participating varies across the life-cycle, irrespective of their year of birth after controlling
for other characteristics. The coefficients on the year of birth dummy variables allows us to compare
people born in different years and so identify whether the younger cohorts behave differently in
relation to labour force participation than their older counterparts.35
We estimate equation (1) separately for men and women and disaggregated by rural and urban and
Java-Bali and non-Java-Bali to give us an understanding of the main drivers of female participation.

27


3.2.1 Descriptive results
Table 7 presents the summary statistics of labour force participation d the explanatory variables for
rural and urban areas.
Table 7 Summary statistics of labour force participation and explanatory variables

Urban Rural
Variables Male Female Male Female
Individual characteristics:
Labour force participation 81.2% 47.3% 88.5% 56.1%
Household head 57.3% 7.5% 62.1% 6.7%
Marital status: Single 37.1% 71.2% 30.8% 19.9%
Marital status: Married 61.1% 63.4% 67.0% 71.8%
Marital status: Divorced 0.9% 2.6% 1.0% 2.6%
Marital status: Widowed 00.9% 5.2% 1.2% 5.7%
Education: At least primary 90.8% 86.0% 75.4% 67.2%
Education: At least lower secondary 69.5% 62.3% 38.5% 30.8%
Education: At least upper secondary 22.1% 18.5% 8.1% 6.2%
Education: At least tertiary 10.5% 9.5% 2.8% 2.5%
Household characteristics:
Household size 4.8 4.7
Babysitter 0.3 0.3
Number of elderly females 0.1 0.1
Number of elderly males 0.1 0.1
Number of children: 0 to 2 years old 0.2 0.2
Village characteristics:
Distance to nearest district office ('100km) 0.5 0.8
Main income: Agriculture 0.3 0.961
Main income: Mining/quarrying 0.01 0.01
Main income: Processing/industry 0.1 0.01
Main income: Large trading/retail 0.2 0.01
Main income: Services other than trade 0.35 0.02
Unemployment 0.06 0.06
Observations 469,157 481,751 681,427 691,280
Source: Author’s calculations using Susenas and PODES.
As described above, there is a substantial gap between female and male labour force participation –
female labour force participation is on average 40 percent less than male participation (85 percent
compared to 52 percent). The participation rates are higher for men and women in rural areas
compared to urban areas. Most household heads are males, and most females and males are married.
There are more potential babysitters in urban households, possibly due to higher housing prices. At
the village level, the distance to nearest district office is unsurprisingly less in urban areas and
agriculture is most prevalent in rural areas while services and large trading/retail are large income
sources in urban areas.

28


3.3 General results
Table 8 presents the results of estimating equation (1) for men and women by rural and urban status.
Marital status is a key driver of labour force participation for women. A married woman in rural areas
is 11 percentage points less likely to be working or looking for work than a single woman and this
difference is statistically significant. The impact is more pronounced for married women in urban areas
as they are 25 percentage points less likely to be participating than single women.
Being a household head for both men and women increases the likelihood of participation in both
urban and rural areas. But the magnitude of the impact for men is substantially smaller because men
are generally the primary income earners so work irrespective of whether they are the household
head or not. The level of educational attainment is also a strong driver of female labour force
participation. For women, completing upper secondary school increases the likelihood of participation
compared to someone who only completed lower secondary by 19 percent in rural areas and by
22 percent in urban areas respectively. The magnitude of the impact increases further if women attain
tertiary education. But for men there is little variation in the probability of participating with different
levels of education. Men, as the main bread winners in Indonesian society tend to work, regardless of
their level of education.
Household size decreases participation for women in rural areas –an increase in household size of one
decrease the likelihood of participation by nearly 2 percentage points. But the magnitude of the
impact for urban females and males are much closer to zero. The presence of a potential babysitter,
elderly female or male in the household significantly increase the likelihood of female participation by
around 1 to 3 percentage points. This may reflect the ability of the woman to leave children at home
with the babysitter or the elderly relative. The magnitude of the impact of these potential child-
minders is much higher for women than men (the effect is negligible for men). The presence of
children in the household also has markedly different effects for men and women. For women, the
presence of young children has a negative effect on the likelihood of participating. The presence of a
child under two years of age decreases the probability of participation by 8 percentage points but has
only a small (and positive) effect on men’s labour market activity.
On the demand side of the labour market, we hypothesised that the coefficient for distance to the
nearest district office would be negative as it was intended to capture distance to an active labour
market, however, the coefficient is positive, albeit small. The variable could be positively correlated
with agricultural employment in rural areas, with the positive coefficient reflecting women’s greater
involvement in agriculture. The villages’ main sources of income variables show that female
participation is highest in areas with agriculture and industry (which includes manufacturing). But as
the economy moves further away from agriculture to other sectors, female participation drops.

29


Table 8 Marginal effects of pooled sample
Rural Urban
Variables Female Male Female Male
Household head 0.2115*** 0.0563*** 0.1191*** 0.0385***
(0.0031) (0.0015) (0.0040) (0.0021)
Marital status: Single (omitted)
Marital status: Married -0.1129*** 0.0758*** -0.2508*** 0.1579***
(0.0025) (0.0016) (0.0028) (0.0025)
Marital status: Divorced 0.0057 0.0089*** 0.0059 0.0304***
(0.0050) (0.0019) (0.0058) (0.0033)
Marital status: Widowed -0.1629*** 0.0146*** -0.1626*** 0.0491***
(0.0046) (0.0016) (0.0047) (0.0025)
Education: No schooling (omitted)
Education: At least primary -0.0297*** 0.0018** -0.0226*** 0.0175***
(0.0016) (0.0007) (0.0026) (0.0021)
Education: At least lower secondary -0.0652*** -0.0404*** -0.0608*** -0.0632***
(0.0017) (0.0007) (0.0020) (0.0011)
Education: At least upper secondary 0.1257*** 0.0169*** 0.1609*** 0.0588***
(0.0032) (0.0009) (0.0027) (0.0012)
Education: At least tertiary 0.2516*** 0.0062*** 0.2038*** -0.0085***
(0.0040) (0.0019) (0.0034) (0.0024)
Household size -0.0158*** -0.0049*** 0.0046*** -0.0040***
(0.0006) (0.0002) (0.0006) (0.0004)
Babysitter 0.0177*** 0.0049*** 0.0134*** -0.0059***
(0.0020) (0.0005) (0.0022) (0.0011)
Number of elderly females 0.0315*** 0.0036*** 0.0106*** -0.0039**
(0.0025) (0.0009) (0.0029) (0.0017)
Number of elderly males 0.0252*** 0.0088*** 0.0209*** 0.0060***
(0.0024) (0.0009) (0.0030) (0.0019)
Number of children: 0 to 2 years old -0.0792*** 0.0105*** -0.0754*** 0.0183***
(0.0016) (0.0007) (0.0020) (0.0014)
Number of children: 3 to 6 years old 0.0055*** 0.0084*** -0.0251*** 0.0170***
(0.0013) (0.0006) (0.0016) (0.0011)
Number of children: 7 to 11 years old 0.0251*** 0.0088*** -0.0043*** 0.0152***
(0.0012) (0.0004) (0.0014) (0.0009)
Number of children: 12 to 17 years old 0.0223*** 0.0073*** 0.0041*** 0.0115***
(0.0011) (0.0004) (0.0012) (0.0007)
Distance to office ('100km) 0.0011 -0.0036 0.0159*** 0.0005
(0.0009) (0.0028) (0.0016) (0.0019)
Main income: Agriculture (omitted)
Main income: Mining/quarrying -0.1260*** -0.0289*** -0.0695*** -0.0172***
(0.0103) (0.0034) (0.0077) (0.0014)
Main income: Processing/industry -0.0191*** -0.0325*** 0.0047 -0.0307***
(0.0071) (0.0025) (0.0030) (0.0013)
Main income: Large trading/retail -0.0942*** 0.0244*** -0.0180*** 0.0499***
(0.0069) (0.0006) (0.0021) (0.0018)
Main income: Services other than trade -0.1307*** 0.0366*** -0.0389*** 0.0756***
(0.0048) (0.0004) (0.0020) (0.0011)
Unemployment -0.0027*** 0.007*** -0.0070*** -0.0015***
(0.0002) (0.0059) (0.0002) (0.0120)
Observations 691,280 681,427 481,751 469,157
Source: Authors calculations using Susenas and PODES.
* The marginal effects for province and age dummies can be provided on request.
Significance levels *** p<0.01, ** p<0.05, * p<0.1

30


3.4 Age and cohort results
The descriptive results showed that the raw female labour force participation figures have largely
remained unchanged over the survey years. This section examines the results by age and cohort to
enable us to understand the extent of changes in participation across the life-cycle and/or changing
attitudes by younger cohorts towards participation that may keep the aggregate figures unchanged.
The results for males and females are shown below in Figure 18. The results of the age analysis are
largely as anticipated. It shows female labour force participation increases quickly up until around
25 years of age before slowing over the ages typically associated with child bearing. It peaks at around
50 years of age before starting to decline. The contrast with males shows the extent of the disparity
across these years. Men’s participation rises sharply to almost 100 percent once the period of
educational attainment is over and remains constant before starting to decrease from age 50.
The cohort analysis reveals some interesting findings. It shows that female participation has been
increasing from around 40 percent for those born in the 1940s to around 60 percent for those born in
the 1980s. Male labour force participation has remained at about 95 percent across the cohorts.
Figure 18 Age and cohort effects
Age effect Cohort effect

1
Participation Probability
0.8
0.6
0.4
0.2
0
15 20 25 30 35 40 45 50 55 60 1943 1953 1963 1973 1983
Age Year of Birth
Female Male Females Males

Source: Author’s calculations using Susenas and PODES
The analysis thus reveals a large increase in the underlying propensity for women to participate, which
may reflect changing cultural norms. If this trend continues overtime, as the older cohorts exit the
labour market we would expect to see an increase in total female participation.
There are some differences between rural and urban areas. The age profile for younger urban females
is lower than their rural counterparts. This probably reflects the higher educational attainment in
urban areas delaying their entry into the labour market. The younger female cohorts in urban areas
have also improved their participation the most compared to their older counterparts. The labour
force participation of the older cohorts in urban areas is estimated at around 20 percent and nearly
triples to 60 percent for the youngest cohorts. The increase in rural areas is much smaller but starts
from a higher base (increasing from 40 percent to 60 percent). This is again consistent with changing
cultural norms and women beginning to be accepted into non-agricultural employment in urban areas.

31


In further results not reported here we find that younger cohorts for both married and unmarried
females increase their labour force participation compared to their older counterparts. This suggests
that the change in attitudes towards female participation is not hindered by traditional roles linked to
marital status. Younger cohorts across all levels of education attainment have improved their labour
force participation compared to their older cohorts There are also similar increases in labour force
participation for women in younger cohorts across households with different ages of children and
villages with processing/industry, large trading/retail and services as their main source of income.
Younger cohorts from agricultural villages have also increased their labour force participation but not
to the same extent as the other sectors given that female labour force participation was already quite
high in the older cohorts in agricultural villages.
In Appendix 4 we examine gender differences in youth unemployment. We do this as the high rate of
youth unemployment is a pressing policy concern in Indonesia. Youth unemployment is higher across
the whole population and higher among the better educated. We however find little in terms of a
gender wage gap in youth unemployment. Youth unemployment is slightly higher among women in
rural areas, with no gender difference apparent in urban areas. Hence, young men and women seem
to face similar challenges in terms of finding employment early in their working lives.
3.5 Female Labour Force Participation Projection

The G20 countries’ commitment to increase the female/male labour market participation gap in 2014
by 25% by 2025, means that Indonesia will need to increase its female labour force participation (FLFP)
to 58.5% in the next 10 years. This goal will be challenging to achieve given that women’s labour force
participation in Indonesia has remained constant at just over 50% for the last two decades. However,
our work above identified an increasing underlying propensity for women to participate in the labour
market once other factors, such as changes in urbanization, education and household composition,
are controlled for. This section presents projections of FLFP to 2025.
We build on the estimation presented in the analysis of the FLFP in Section 3.3, using SUSENAS data
from 1996, 2000, 2007, 2011 and 2013. In this section, we first examine how well the model predicts
FLFP by comparing the values predicted by the model with the observed levels in the raw data. We
then estimate the rate of growth of each of the variables that determine FLFP in our model and use
these to project FLFP through to 2025. 36 We examine the sensitivity of our results to alternative
scenarios and then conclude.
3.5.1 Model Performance

Using the estimated coefficients in equation 1 in section 337, we calculate the predicted values of FLFP
within the sample period and compare the result to the observed values. Figure 19 shows the result.
The model performs relatively well with the predicted value being close to the observed value, except
in 2000 where the actual value dips from trend. We observe that the predicted trend between 1996
and 2007 is steeper that the trend after 2007.

32


Figure 19 Observed and model predicted Female Labour Force Participation
70%
60%
50%
40%
30%
1996 2000 2007 2011 2013
Female Predicted Female Observed

3.5.2 Prediction of determinant variables

In order to predict the values of FLFP up to 2025, we need to make assumptions about the values of
the variables’ that determine FLFP (e.g. level of education, urbanization, age composition). We use a
very simple trend-time series model to predict the value of all the determinants (') up to 20 years
ahead following equation 2 which we estimate using data from 1996 to 2013.
Equation 2 Trend prediction of determinants of FLFP
'" = )* + )& , + -"
Where , takes the value of 1 in 1996, 5 in 2000, 12 in 2007, 16 in 2011 and 18 in 2013; and - is the
random error term. Table 9 shows the estimated percentage point growth for each of the variables
and the trajectories are shown in appendix 3. In terms of education, this model predicts that each year
the proportion of women with at least primary school education will grow 0.008 percentage points
while the proportion of women with tertiary education or more will increase by 0.0032 annually. The
proportion of people living in urban areas is forecast to increase by 0.0073 percentage points each
year.
In order to apply the estimated life cycle effects (coefficients on age groups) we also project the
distribution of women across age groups.38 We assume that the proportion of people living in each
province remains constant at the mean.

33


Table 9 FLFP determinats annual growth in percentage points
VARIABLES Time trend

Household head 0.0020
Marital status: Married 0.0022
Marital status: Divorced 0.0000
Marital status: Widowed 0.0017
Education: Primary 0.0080
Education: Lower secondary 0.0122
Education: Upper secondary 0.0042
Education: Tertiary 0.0032
Household size -0.0273
Number of elderly females -0.0004
Number of elderly males -0.0002
Presence of a potential babysitter 0.0019
Number of children: 0 to 2 years old 0.0004
Number of children: 3 to 6 years old -0.0028
Urban 0.0073
Distance to nearest district office ('100km) 0.0063
Main income: Mining/quarrying 0.0004
Main income: Processing/industry 0.0007
Main income: Large trading/retail -0.0011
Main income: Services other than trade -0.0023
Unemployment# -0.1431

3.5.2 Female Labour Force Participation Projection

According to the predicted model, the target of decreasing the female to male labour force
participation gap by 25% in 2025 will not be achieved under current trends. We present two
projections. The most optimistic projection assumes that trends in underlying variables observed
between 1996 and 2013 will continue. The second, more pessimistic projection, reflects the fact the
growth in FLFP flattens off after 2007 (see figure 1), and so uses only data from 2007 to 2013 to project
into the future.
Figure 20 presents the results of both scenarios. The red line between 1996 and 2015 shows the
observed levels. The green triangles show the official BPS estimated figures. The orange dotted line
represents the optimistic scenario and the blue dashed line represents the pessimistic scenario.

34


Figure 20 Projection of Female Labour Force Participation in Indonesia
70%
65%
60%
55%
50%
45%
40%
35%
30%
1996
2000
2007
2011
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Projection FLFP target 2025 Projection FLFP (07-13) BPS Official

Under the optimistic scenario FLFP just reaches the 58.5% target by 2025. It is forecast that FLFP will
reach 59% by 2025. Under the less optimistic scenario the FLFP will remain almost constant through
to 2025 with FLFP decreasing slightly by 2025.39
3.6 Conclusions
Female labour force participation in Indonesia has remained relatively constant from 1996 to 2013
even in the face of dramatic economic change. Our findings however suggest that once you control
for individual, household and village characteristics, there are signs that the underlying propensity for
women to participate in the labour force has been increasing, particularly in urban areas. This is an
interesting result and is consistent with changes in societal attitudes towards females in the labour
market. Offsetting this secular increase in women’s labour force participation has been decreasing
participation as a result of the lesser importance of agriculture. If this trend continues then as the
older cohorts exit the labour market, female labour force participation will eventually increase.
We however find that the G20 target of 58.5% female labour force participation by 2025 will only be
reached under our most optimistic scenario. The less optimistic (and arguably more realistic)
scenario suggests that the FLFP may even decrease if the most recent trends continue.

Our results have several policy implications. That marital status and the presence of young children
have such a large negative impact on female labour force participation suggests that policies targeted
at providing some form of child-care for women with young children may be effective. Policies
ensuring that women have access to the higher levels of education, particularly in rural areas where
educational attainment is lower, could also be useful. That the cohort analysis finds that the
underlying propensity for women to participate in the labour markets is increasing is promising.
However, the ongoing movement of the Indonesian economy away from the agricultural sector, given
the importance of the agricultural sector to female employment, will continue to offset this effect.
Policies designed to provide women with access to employment in non-traditional industrial sectors,
for example, through the provision of subsidised vocational education and/or campaigns that provide
and promote opportunities for women in these sectors, are also worthy of attention.

35


4. Gender Wage Gap in Indonesia - a distributional analysis of the
formal and informal sector40
4.1 Introduction
Indonesia has a large gender wage gap with women being paid around 30% less than a similarly
qualified man. In Figure 13 in section 2 we presented the female/male ratio of average hourly wages
for the formal and informal sectors separately. The average hourly wage of females in the formal
sector is somewhere between 70% and 80% of that of males. This looks to have been improving over
time. The figures for the informal sector however show a worsening situation.
Gender wage gaps ultimately reflect differences between men and women in education, training and
skills, experience (including reproductive choices), occupational choice, employment status, labour
market choices based on social expectations, discriminatory hiring and other practices. Understanding
the most important differences driving gender wage gaps is vital for policy design.
The most widely used method of decomposing the wage gap into components that reflect differences
in the underlying productivity of women vis-a-vis men (for example, different educational attainment)
and difference in the returns to these characteristics that remain unexplained (and are often referred
to as discrimination) is the Blinder-Oaxaca decomposition. 41 Existing studies that attempt to
determine the explained and unexplained proportion of the gender wage gap in Indonesia suggest
that although the raw wage gap has been decreasing over time, the proportion attributed to
discrimination has been increasing. Those studies were described in the section 2.2.5. A limitation of
these studies is that they focus only on the decomposition of the mean, and only in the formal sector.
It is likely however that the extent of the wage gap and the extent to which it can be explained by
differences in productive characteristics varies along the wage distribution – for lower and higher paid
women. Women at the bottom of the wage distribution have different characteristics than women at
the top and also each of them may face different institutional challenges. There are also likely to be
differences between the formal sector and the informal sector, where more than 80% of female
workers work in Indonesia.
In this section we present a gender wage gap decomposition along the wage distribution for the formal
and the informal sector. We explore the main components of the explained wage gap and present
evidence of changes over time.
4.2 Data and Method

The data used in this section comes from the 2011 National Socioeconomic Survey (Susenas), which
was described in some detail in Section 3 above. This survey provides information on 285,186
households across Indonesia. As above, we use the Susenas as it provides information on fertility and
years of education which allows us to construct a more accurate proxy for years of experience which
is an important determinant of wages42.
We define formality according to job employment status. A worker is considered formal if he or she
reports being i) an employer assisted by permanent and paid employees or ii) an employee. A worker
is considered informal if he or she reports being i) self-employed; ii) an employer with casual and
unpaid workers; iii) a casual worker; or iv) an unpaid worker. We exclude unpaid workers from the
analysis.

36


Our sample is made of 332,718 individuals aged between 15 and 64 that reported wages and worked
in the week previous to the survey for 16 to 84 hours. From that sample, 161,040 individuals work in
the formal sector and 171,678 individuals work in the informal sector. Figure 21 shows the hourly
wage distribution (in logs) for males and females in the formal and informal sectors. It shows that
women are concentrated amongst low earners in both sectors. We calculate that in the informal
sector the gender gap is higher - on average women’s hourly wages are 67% of an average man’s
hourly wage, compared to 77% in the formal sector. The gender wage gap decreases along the wage
distribution in the formal sector while in the informal sector it is relatively stable.
Figure 21 Logarithm of the Hourly wages of male and female workers

Wage Density Susenas 2011 Wage Density Susenas 2011
Formal Sector Informal Sector
.5
.5
.4
.4
.3
.3
.2
.2
.1
.1
0
0
0 5 10 15 0 5 10 15
ln(Hourly wage) ln(Hourly wage)
Density Density Density Density

Females Males Females Males

Figure 22 Histogram of the years of experience and education attainment by gender
Histogram of the years of experience by gender
Male Female
.03
.02
Density
.01
0
0 20 40 60 0 20 40 60
Years of experience
Graphs by Female
Differences in wages between men and women can reflect differences in productive characteristics
between genders. Figure 22 present gender differences of the years of experience43 and education
attainment. These two variables are very important indicators of labour productivity. While we find
that on average men have higher years of experience than women, for example in the formal sector
we calculate that men have an average of approximately 4.5 more years of experience, we do not
observe big gender differences in education attainment, except in tertiary education (33% of women
versus 17% of men). Table 10 presents the differences for other potential determinant of labour
productivity such as health status, vocational training, Internet usage in the last 3 months as an
indicator of computer skills, geographic indicators, industry type, status of employment and marital
status. In the informal sector more women report being self-employed than men, with men more
likely to be employers assisted by temporary and unpaid workers. In the formal sector females are
over-represented in the services sector, which is characterized by long shifts, making the hourly wage
very low. Men are over-represented in mining and agriculture.

37


We estimate the returns to the productive characteristics shown above for each gender by estimating
the following wage equation:

Equation 3 Wage equation
1
.",0 = '",0 !0 + -",0 ,
3 -",0 = 0, 5 = 6789, :96789,

where .",0 is the log of the hourly wage for individual ; of gender 5 , and Xi are the productive
characteristics – for example, education, experience, industry of employment etc. The estimate
coefficient on each productive characteristic is an estimate of the return to that characteristic.
Table 11 shows that the returns to some characteristics differ by gender, and that there are quite large
differences between the formal and informal sectors. In the formal sector men and women are
rewarded very similarly for years of experience and most other variables. The biggest difference is
found in returns to education, with women receiving much higher returns to education. Compared to
a person with no schooling, having completed senior high school is associated with 58% higher
earnings on average for men, and 104% higher earning on average for women. Women also receive a
higher return to vocational training, earning on average 5% more than women without vocational
training, while men with vocational education do not receive a wage premium.
The picture is somewhat different in the informal sector. Returns to education are again higher for
women, although the gender difference is much smaller. Status of employment plays a more
important role in the informal sector. The penalty for casual employment is greater for female workers.
Men working in casual jobs earn on average 13% less than men who are employers assisted by casual
and unpaid employees, while females in casual jobs earn 22% less than women who are employers
assisted by casual and unpaid employees. Marriage also penalises women in the informal sector. On
average married males get an average earnings bonus of 17% compared to unmarried men while
women are penalized on average by 6% compared to unmarried women.

38


Table 10 Summary statistics of productivity characteristics
Formal Informal All workers
Male Female Male Female Male Female
Mea Std. Mea Std. Std. Std. Std. Std.
Variable n Dev. n Dev. Mean Dev. Mean Dev. Mean Dev. Mean Dev.
No school 0.08 0.27 0.07 0.25 0.22 0.41 0.26 0.44 0.15 0.36 0.16 0.37
Primary 0.2 0.4 0.15 0.36 0.39 0.49 0.37 0.48 0.3 0.46 0.26 0.44
Junior HS 0.17 0.38 0.12 0.33 0.19 0.39 0.18 0.38 0.18 0.39 0.15 0.36
Senior HS 0.38 0.49 0.32 0.47 0.19 0.39 0.17 0.38 0.28 0.45 0.25 0.43
Vocational training in
high school 0.11 0.31 0.09 0.29 0.04 0.2 0.04 0.2 0.07 0.26 0.07 0.25
Diploma I/II 0.02 0.12 0.05 0.22 0 0.05 0 0.07 0.01 0.09 0.03 0.17
Diploma III/IV/S1 0.14 0.35 0.27 0.44 0.02 0.12 0.02 0.13 0.07 0.26 0.15 0.35
Postgraduate 0.01 0.11 0.01 0.11 0 0.02 0 0.02 0.01 0.08 0.01 0.08
Used internet in the last
3 months 0.21 0.4 0.25 0.44 0.03 0.17 0.02 0.14 0.11 0.32 0.14 0.35
20.8 11.5 16.2 10.6 12.6 11.3 12.6
Years of experience 4 3 5 7 27.86 3 26.07 7 24.57 2 20.95 12.05
Married 0.75 0.43 0.63 0.48 0.86 0.34 0.75 0.43 0.81 0.39 0.69 0.46
Number of children born 1.58 1.67 2.97 2.15 2.25 2.03
Employer assisted by
permanent paid 0.1 0.3 0.04 0.2 0.05 0.21 0.02 0.15
Paid worker/Employee 0.9 0.3 0.96 0.2 0.42 0.49 0.5 0.5
Self-employed 0.4 0.49 0.53 0.5 0.21 0.41 0.25 0.43
Employer assisted by
temporary/unpaid 0.38 0.49 0.29 0.45 0.2 0.4 0.14 0.34
Casual worker 0.22 0.41 0.19 0.39 0.12 0.32 0.09 0.29
Industry: Agriculture 0.16 0.37 0.09 0.28 0.56 0.5 0.33 0.47 0.37 0.48 0.2 0.4
Industry: Mine 0.16 0.37 0.01 0.11 0.11 0.31 0.01 0.09 0.13 0.34 0.01 0.1
Industry: Manufacture 0.14 0.35 0.18 0.38 0.04 0.19 0.09 0.28 0.09 0.28 0.13 0.34
Industry: Trade 0.11 0.31 0.13 0.33 0.15 0.36 0.45 0.5 0.13 0.34 0.28 0.45
Industry: Service 0.43 0.49 0.6 0.49 0.15 0.36 0.12 0.32 0.28 0.45 0.37 0.48
Any health complaint
last month 0.25 0.43 0.24 0.43 0.29 0.45 0.33 0.47 0.27 0.44 0.28 0.45
Urban 0.59 0.49 0.67 0.47 0.31 0.46 0.42 0.49 0.44 0.5 0.55 0.5
Jakarta 0.03 0.17 0.04 0.2 0.01 0.1 0.01 0.11 0.02 0.14 0.03 0.16
Sumatra 0.3 0.46 0.28 0.45 0.3 0.46 0.28 0.45 0.3 0.46 0.28 0.45
Java - Bali 0.37 0.48 0.43 0.49 0.32 0.47 0.38 0.49 0.34 0.47 0.4 0.49
NTB - NTT 0.03 0.18 0.04 0.19 0.05 0.22 0.06 0.24 0.04 0.2 0.05 0.21
Kalimantan 0.12 0.33 0.09 0.29 0.1 0.3 0.09 0.29 0.11 0.31 0.09 0.29
Sulawesi 0.12 0.32 0.12 0.32 0.14 0.35 0.12 0.32 0.13 0.34 0.12 0.32
Maluku 0.03 0.16 0.02 0.16 0.04 0.2 0.03 0.17 0.03 0.18 0.03 0.16
Papua 0.04 0.19 0.03 0.16 0.05 0.21 0.03 0.18 0.04 0.2 0.03 0.17
N 109882 51158 124791 46887 234673 98045
Notes: Years of experience is calculated using age- years of education -5.

In both sectors we can clearly see the differences in returns by industry. Women in trade or services
on average earn less than similar women working in farming activities while on average men in these
industries earn more. We also observe for both sectors that women have a lower base wage (the
constant). In the formal sector, Rp1,247 (7.12 log wage) is the average hourly wage for women with
no experience, single, living in rural areas outside Jakarta, with no health complaints, no vocational

39


training, no use of internet in the last three months, working as a paid worker/employee in a farming
job, with no education; while for men with the same characteristics the average wage per hour is
Rp1,658 (7.41 log wage).
Table 11 OLS estimates of Wage by gender and sector of employment
Formal Informal
VARIABLES Male Female Male Female
Years of experience 0.0455*** 0.0506*** 0.0216*** 0.0325***
(0.0001) (0.0001) (0.0001) (0.0001)
2
Years of experience /100 -0.0612*** -0.0673*** -0.0322*** -0.0472***
(0.0001) (0.0002) (0.0001) (0.0002)
Married 0.1801*** 0.0863*** 0.1717*** -0.0587***
(0.0004) (0.0005) (0.0005) (0.0006)
Urban 0.1207*** 0.1538*** 0.1039*** 0.1481***
(0.0003) (0.0005) (0.0004) (0.0006)
Jakarta 0.3561*** 0.3128*** 0.4193*** 0.4896***
(0.0005) (0.0007) (0.0011) (0.0016)
Any health complaint last month -0.0243*** -0.0051*** -0.0105*** -0.0399***
(0.0003) (0.0005) (0.0003) (0.0006)
Vocational training in high school -0.0006 0.0514*** -0.0615*** -0.0904***
(0.0005) (0.0008) (0.0008) (0.0015)
Used internet in the last 3 months 0.2799*** 0.2455*** 0.2621*** 0.4437***
(0.0004) (0.0006) (0.0009) (0.0019)
Self-employed -0.0337*** -0.0790***
(0.0004) (0.0006)
Employer assisted by permanent paid 0.4925*** 0.4826***
(0.0005) (0.0011)
Casual worker -0.1355*** -0.2238***
(0.0005) (0.0009)
Primary 0.1004*** 0.2256*** 0.0622*** 0.0608***
(0.0006) (0.0010) (0.0004) (0.0007)
Junior HS 0.2706*** 0.5834*** 0.1504*** 0.1773***
(0.0006) (0.0010) (0.0005) (0.0009)
Senior HS 0.5813*** 1.0441*** 0.2691*** 0.3329***
(0.0006) (0.0010) (0.0006) (0.0011)
Diploma I/II 0.9030*** 1.4655*** 0.3475*** 0.4513***
(0.0014) (0.0015) (0.0033) (0.0040)
Diploma III/IV/S1 1.1321*** 1.6852*** 0.6276*** 0.7032***
(0.0007) (0.0011) (0.0014) (0.0022)
Postgraduate 1.5784*** 2.1995*** 1.0392*** 1.6440***
(0.0014) (0.0021) (0.0061) (0.0104)
Agriculture
Horticulture 0.1129*** -0.0494*** 0.0405*** -0.0234***
(0.0021) (0.0034) (0.0010) (0.0018)
Plantation 0.5046*** 0.3473*** 0.4054*** 0.3602***

40


(0.0010) (0.0018) (0.0006) (0.0013)
Fishery 0.2473*** -0.0028 0.2552*** -0.0224***
(0.0013) (0.0048) (0.0009) (0.0035)
Livestock 0.1289*** -0.1232*** -0.1874*** -0.3221***
(0.0017) (0.0041) (0.0011) (0.0025)
Forestry and other agriculture act. 0.2929*** -0.0626*** 0.1069*** -0.1572***
(0.0018) (0.0051) (0.0015) (0.0043)
Mining
Mining 0.6564*** 0.4040*** 0.3088*** 0.0125***
(0.0011) (0.0038) (0.0013) (0.0042)
Electricity and gas 0.5755*** 0.3046*** 0.6732*** -0.1151***
(0.0016) (0.0049) (0.0048) (0.0183)
Construction 0.3673*** 0.2727*** 0.3399*** 0.4053***
(0.0009) (0.0028) (0.0006) (0.0044)
Manufacturing 0.4029*** 0.1882*** 0.1676*** -0.3493***
(0.0009) (0.0015) (0.0008) (0.0011)
Trade 0.2343*** -0.1029*** 0.3128*** -0.0632***
(0.0009) (0.0015) (0.0005) (0.0009)
Services
Hotels and restaurants 0.2263*** -0.1226*** 0.2880*** 0.0800***
(0.0012) (0.0018) (0.0015) (0.0016)
Transportation 0.3738*** -0.0204*** 0.0990*** 0.3162***
(0.0010) (0.0027) (0.0007) (0.0062)
Communication 0.3155*** 0.0418*** 0.1310*** -0.1674***
(0.0015) (0.0026) (0.0036) (0.0062)
Finance Insurance 0.5239*** 0.2665*** 0.5642*** 0.9245***
(0.0012) (0.0019) (0.0067) (0.0098)
Education services 0.1425*** -0.1952*** 0.1588*** -0.0807***
(0.0010) (0.0016) (0.0042) (0.0044)
Health services 0.3183*** -0.0226*** 0.5172*** 0.1019***
(0.0015) (0.0018) (0.0041) (0.0049)
Social services 0.3778*** -0.1814*** 0.2056*** -0.0514***
(0.0009) (0.0015) (0.0007) (0.0012)
Other 0.3317*** -0.1289*** 0.1328*** -0.1440***
(0.0016) (0.0025) (0.0016) (0.0025)
Constant 7.4132*** 7.1287*** 8.1436*** 7.9706***
(0.0011) (0.0017) (0.0010) (0.0018)
Observations 27,127,539 12,872,858 26,707,731 10,389,466
R-squared 0.3771 0.4404 0.1747 0.1409
Notes: Years of experience is calculated using age- years of education -Number of career interruptions -5. In
the formal sector equation the reference category is Paid worker/Employee. In the informal sector the
references is Employer assisted by temporary/unpaid. In education No schooling is the reference category. In
industry Farming is the reference category. We include regional fixed effects. Standard errors in parentheses.
Significance levels *** p<0.01, ** p<0.05, * p<0.1.

41


4.3 Decomposition Results
In this section we discuss our results of the Blinder-Oaxaca decomposition of the mean and then
present the results along the distribution focusing on the 10th, 30th, 70th and 90th quantiles. For the
decomposition along the distribution we use an Unconditional Quantile Regression. For details see
appendix 1 or refer to our original paper. We then present results for separate age groups (15-29,
30-44 and 45-64 years) so as to get a sense of how the gender wage gap and its determinants are
changing over time.
We find that on average the raw gap is 34% in the formal sector and 50% in the informal sector.
However, as presented in figure 23, some of this gap is due to differences in productive characteristics
among genders. Once we control for these differences the remaining unexplained gap decreases to
20% and 36% in the formal and informal sectors respectively. This means that in the formal sector 38%
of the total wage gap is explained by differences in characteristics while 62% of the total wage gap is
due to discrimination. In the informal sector the proportion explained is lower 25%, implying that 75%
of the wage differential is due to discrimination.
Figure 23 Gender wage gap decomposition at the mean by sector of employment
Table 12 presents the decomposition of the explained component which identifies the key
characteristics where women are different from men and that explain some of the wage differences.
Variables with a positive sign represent those characteristics where the mean for women is lower (less
productive) than the mean for men, so increasing the mean values for women will lead to a reduction
in the wage gap. Characteristics with negative signs are those where the mean for women is higher
(more productive) than the mean for men and if women had the same characteristics as men the wage
gap would be even bigger.

42


Table 12 Characteristics contribution to the total wage gap at the mean by sector of employment
Formal Informal
Experience 36%*** 0%***
Married 8%*** 3%***
Skills -4%*** 1%***
Education -30%*** 2%***
Region 0%*** 1%***
Status of employment 8%*** -1%***
Industry 19%*** 18%***
Notes: Results are grouped as experience (experience and experience/1002), skills (vocational training
and health status), and region (regional dummies, Jakarta dummy and urban dummy). Significance
levels *** p<0.01, ** p<0.05, * p<0.1.
For the formal sector we find that the number of years of experience explains the largest component
of the wage gap (36%)44. The industry component shows that men work in more highly remunerated
industries and this explains 19% of the gap. Similarly, being married and status of employment have a
positive contribution of 8%. Health, vocational training, internet usage have only small effects, they
are shown under the skills category. Education makes a large contribution to the wage gap but serves
to reduce it by 30% as women are more educated than men in the formal sector.
In the informal sector we find that the industry of employment explains the largest component of the
wage gap (18%). Human capital characteristics like experience, education, health status, specialized
skills play only a very small role.
4.3.1 Decomposition across the Wage Distribution

In the formal sector we find clear evidence of sticky floors. This is that women at the bottom of the
wage distribution experience a higher wage gap. The wage gap at the 10th quantile is 63% and then
decreases to 13% at the 90th quantile.45 In the informal sector we find only mild evidence of sticky
floors. The wage gap decreases from 63% at the 10th quantile to 46% at the 90th quantile.
Figure 24 presents the distribution of the total wage gap and the explained and unexplained
proportions. In the formal sector the magnitude of the explained component remains relatively
constant along the distribution and increases at the top end. At the 10th quantile 39% of the wage gap
can be explained by differences in characteristics while 50% of the gap is explained at the top end.
This implies that even when the gap decreases along the distribution, most of the gap is still
unexplained. The situation is similar in the informal sector (only at a lower level) where the proportion
of the explained gap is almost constant at 23% except in the 90th quantile where 32% of the gap is
explained. Consequently, the unexplained part is relatively constant as well along the distribution.

43


Figure 24 Gender wage gap across the wage distribution by status of employment
Figure 25 presents the relative contribution of each characteristic to the explained gap along the wage
distribution. The black line, whose axis is on the right, is the percentage of the gap explained by
differences in characteristics. In the formal sector we find that experience, education, industry and
status of employment are the characteristics that explain most of the differences in wages. The
magnitude of their contributions change as we move along the wage distribution, and their relative
importance changes as well. For example, industry of employment explains 23% of wage differentials
in the 10th quantile and is the most important factor while at the 70th quantile is the least important
factor explaining only 4% of the wage gap. Years of experience and education explain a larger
proportion of the wage gap at all quantiles. While differences in experience between genders explain
the gap, differences in education help reduce the gap. In the informal sector, industry of employment
explains most of the wage gap. The next most important variables, but with far less explanatory power,
are marital status and education. The magnitude and relative contribution of the variables do not
change along the distribution. The tables that contain the magnitudes are presented in appendix 5.
Figure 25 Decomposition of the explained component of the gender wage gap across the wage distribution by status of
employment

44


4.3.2 Cohort Analysis
Indonesia has been changing in recent years. It is likely that the conditions older women face are
different than the conditions younger women face. In section 2 we presented evidence of education
increases for women. This suggests that the gap in productive characteristics between men and
women has been decreasing over time, and the labour market conditions they face may be changing
as well. Although we are not able to observe the same women over time to account for these changes,
we can get an idea of changes over time by doing a cohort analysis. We divide out sample into three
groups, people aged 15 to 29; 30 to 44 and 45 to 65.46
Figure 26 and figure 27 presents the results for the formal sector.47 We find evidence of sticky floors
for all age groups. However, the total wage gap appears to be decreasing over time. For example, if
we compare women at the 10th quantile of the wage gap in the older age group (45 to 64) with the
younger group (15 to 29) we see that the gap has decreased from 88% to 43%. The same pattern holds
for most of the other quantiles. Although the raw gap increases with age (or reduces over time), the
proportion of the gap explained decreases with age (has been increasing over time). This means that
younger women face the greatest proportion of discrimination, although note that the magnitude of
the unexplained component is smallest for this group. When looking at the characteristics that explain
the wage gap we find the effect of marital status has decreased over time (is greater for older cohorts).
This result may reflect cultural change in terms of how women’s traditional role as a wife and mother
is viewed. The role of education in reducing the wage gap has become more important over time.
Younger women are more highly educated (relative to men) than older women and this explains (in
part) why older women face higher wage gaps. For example in the 10th quantile, while for younger
women we find that education explains -15% of the wage gap (that is, it reduces the gap by 15%), for
women 45 to 64 the educational difference between men and women contributes 2% to the gap.
Figure 26 Gender wage gap across the wage distribution in the formal sector by age cohort

45


Figure 27 Decomposition of the explained component of the gender wage gap across the wage distribution in the formal
sector by age cohort
In the informal sector the trends are less positive. The results are presented in figures 28 and 29. The
situation for women at the top of the distribution seems to have been improving for the younger
cohorts but at the bottom of the distribution has been worsening. For the younger age group wage
gaps are the highest (80%) at the 10th quantile and the lowest at the 90th quantile at 38%. For the older
group it remains almost constant over the quantiles at 45% across the distribution. We also find that
discrimination (magnitude and proportion) is higher among the younger cohorts in the informal sector
and decreases as wages increase. Increases in education among younger women work to reduce the
wage gap in the informal sector but young women who work in this sector face the highest proportion
of discrimination of any age group on any salary. Marital status explains a large proportion of the wage
gap, particularly among older women. This likely reflects career interruptions due to childbearing. That
the effect is smaller for younger women again suggests that cultural norms with regard to marriage
may be changing in favour of women.
Figure 28 Gender wage gap across the wage distribution in the informal sector by age cohort

46


Figure 29 Decomposition of the explained component of the gender wage gap across the wage distribution in the
informal sector by age cohort
4.4 Conclusions
There is significant wage discrimination against women in Indonesia. The raw wage gap averages 41%
and only a small proportion can be explained by differences in productive characteristics. This is true
in both the formal and informal sectors and at most points across the distribution of wages.
Differences in years of experience between men and women explain some of the difference in wages
as women have less experience on average due to career interruptions associated with child-rearing.
Industrial segregation by gender explains a large portion of the wage gap – women work
predominantly in female-dominated industries like services and trade with men being concentrated
in “male” industries like agriculture and mining. Women’s higher educational attainment works to
reduce the wage gap. Overall, the explained proportion of the gap is not larger than 40%, leaving most
of the wage gap unexplained and most likely due to discriminatory practices in the labour market.
Women in lower wage jobs face different challenges than women in the top paid jobs. There is strong
evidence of sticky floors in Indonesia in the formal sector – women at the lower end of the wage
distribution face a much bigger gender wage gap than women in higher wage jobs. There is some
evidence of this improving over time. In the informal sector the gender wage gap is relatively constant
along the wage distribution, although younger women in the informal sector were found to face sticky
floors that their older counterpart do not.

47


5. Conclusions and Future Research Agenda
Despite an expansion of employment opportunities over the past decades, and significant gains in girls’
access to and participation in education, Indonesian women still do not participate equally in the
labour market and their labour force participation has not increased over the past two decades. Once
we control for characteristics on the supply and demand side of the labour market we find that the
underlying propensity for women to participate in the labour force has been increasing, especially in
urban areas. Nevertheless, even our most optimistic projections through to 2025 show Indonesia not
meeting its G20 goals of increasing women’s labour force participation by 25% (to 62.5 percent of
women working) by 2025.
Our research also shows that women who do work find it harder to get a job than their male
counterparts, more difficult to access more lucrative and secure work sectors, work on average far
fewer hours and receive on average about 70% of the equivalent male’s wage in the formal sector and
50% in the informal. Gender wage inequality is driven by differences in training, the industries women
traditionally work in, the occupations they can access, and formality of employment status. However,
even after controlling for observable characteristics, we find that most of the wage differentials are
due to a high degree of wage discrimination against women.
As described in the literature review, gender equality is hampered in many instances by laws and
institutions that deny women equal property rights, acknowledgement as a household head, and
access to work. Women are under-represented politically, making it harder for their voices to be heard.
The results of the literature review and the analytical work provides a framework for a future research
agenda focusing on the main barriers women face when entering the labour market, Table 12 below
synthesises the findings presented above. Different facets of inequality are listed in the column
headings across the top of the table. These are in the rough order in which they affect women over
the life-cycle. The rows list potential contributing factors to gender inequality. The colour coding
indicates the estimated importance of each of the contributing factor to each of the facets of
inequality, from green (not such an important factor) to yellow (of intermediate importance) to red
(of serious importance and worthy of study and policy intervention). It identifies a number of areas
for action. The role of women’s autonomy and cultural norms and its impact on labour market choices
is one such area worthy of attention, as is the role of caring responsibilities (and child care) and labour
market discrimination on labour market outcomes. Physical access to jobs and markets is a further
potentially important barrier which hasn’t received much attention.
The areas we propose for future research are:
• Women’s life-cycle employment patterns a close examination of women’s entry and re-entry
decisions into the labour market and their interaction with caring responsibilities would generate new
understandings of barriers to women’s participation. This should include an analysis of movements
between sectors of employment, occupations and industries, and how these patterns have changed
over time. Child care is an essential component of this. Our findings show that reproductive
responsibilities prevent women from participating in the labour market. Child care arrangements
inside and outside the household have the potential to smooth entry and re-entry to the labour
markets before and after child-rearing. They also potentially influence women’s decisions on sector of
employment and industry.

48


• Youth unemployment is an increasing phenomenon that disproportionately affects young
women. Why young women, particularly better educated women, are more likely to be unemployed
than young men, is not well understood and is worthy of further attention.
• Barriers to entrepreneurship and to expanding women’s businesses need to be better
understood. This would involve a close examination of gender gaps in business aspirations and also in
lifecycle factors and access to finance and markets.
• Transport Infrastructure may be particularly important for women’s labour force participation.
Women’s household responsibilities often make it difficult for them to work at a distance from home.
Transport infrastructure reduces travel times and can make it feasible for a woman to work at a
greater physical distance from home – hence opening up access to jobs and markets for products. This
is true of public transport in urban settings and road construction in rural environments. The role of
infrastructure in reducing labour market gender gaps is little understood and potentially important.
• Laws and changes of laws is an area that requires further analysis. In recent years the
Indonesian government has put in place different laws to promote gender equality in the labour
market like minimum wages and the Equal Employment Opportunity Strategy, it is however not clear
to what extent such initiatives have assisted in reducing gender inequality in the labour market, in
particular when enforcement remains a challenge.

49

Table 13 An Analysis of Factors Determining Labour Market Gender Inequality in Indonesia
50
An Analysis of Factors Determining Labour Market Gender Inequality in Indonesia
Child health/ cog. Early marriage/ Labour force informal/ Occupat. Wages and
Causal Chain: Education Health Migration
development fertility particip. formal choice conditions
Potential Contributing Factors:

household income
mother's health
nutrition
health services
access/quality of schools
child labour
cultural norms
women's autonomy
marriage laws
child care/elderly care
labour market discrimination
labour laws and enforcement
sectoral policy
physical access to jobs
access to finance/property rights
a lesser factor
a moderate factor
a more serious factor


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53


Appendix 1: Blinder-Oaxaca Methodology
The Blinder-Oaxaca methodology decomposes the average difference in wages received by men and
women into two components: 1) The Explained Component – which reflects differences in
characteristics between men and women e.g. education, age, industry, occupation, experience,
number of hours worked, rural/urban etc. when men and women are rewarded for these
characteristics equally; and 2) the Unexplained Component - which reflects differences in the way in
which men and women are rewarded for these characteristics and is often considered to reflect
discrimination.
In order to decompose the raw wage gap into these components, a regression model of wages of the
type shown below is estimated:
! = # + %& + '
Where W is a measure of wages, X is a vector of observed characteristics, usually consisting of

variables of the type listed above. α and β are coefficients to be estimated and ε is an error term. This
equation is estimated separately for men and women:
!( = #( + %( &( + '
!) = #) + %) &) + '
Formally, the differences in mean wages can be written as
Equation 4 Blinder-Oaxaca Decomposition
!( − !) = &( − &) %( + %( − %) &) + (#( − #) )
The first term in this decomposition is the explained part. This is the proportion of wage differentials
that are explained by differences in characteristics of the genders if all individuals were remunerated
as men are. The second term is the unexplained part. This represents the differentials in the
remuneration of characteristics by gender or the gender coefficient differences –the share due to
discrimination.

54


Appendix 2: Probit estimation of Female Labour Force Participation
All years Since 2007
VARIABLES (1996-2013) (2007,2011 & 2013)
Household head 0.4568*** 0.4730***
(0.0071) (0.0117)
Marital status: Married -0.4728*** -0.4484***
(0.0049) (0.0082)
Marital status: Divorced -0.0273*** -0.0520***
(0.0095) (0.0161)
Marital status: Widowed -0.4452*** -0.4882***
(0.0087) (0.0142)
Urban -0.2341*** -0.2543***
(0.0036) (0.0060)
Education: Primary -0.1086*** -0.1052***
(0.0034) (0.0061)
Education: Lower secondary -0.1550*** -0.1496***
(0.0033) (0.0054)
Education: Upper secondary 0.3889*** 0.2511***
(0.0054) (0.0089)
Education: Tertiary 0.5739*** 0.6426***
(0.0078) (0.0121)
Household size -0.0120*** -0.0074***
(0.0011) (0.0019)
Number of elderly females 0.0505*** 0.0457***
(0.0048) (0.0081)
Number of elderly males 0.0513*** 0.0488***
(0.0048) (0.0080)
Babysitter 0.0386*** 0.0226***
(0.0037) (0.0063)
Number of children: 0 to 2 years old -0.2077*** -0.1993***
(0.0031) (0.0053)
Number of children: 3 to 6 years old -0.0229*** -0.0317***
(0.0026) (0.0045)
Number of children: 7 to 11 years old 0.0274*** 0.0166***
(0.0022) (0.0039)
Number of children: 12 to 17 years old 0.0305*** 0.0297***
(0.0021) (0.0036)
Distance to nearest district office ('100km) 0.0150*** 0.0133***
(0.0020) (0.0036)
Main income: Mining/quarrying -0.2383*** -0.2709***
(0.0157) (0.0289)
Main income: Processing/industry 0.0199*** 0.0250**
(0.0068) (0.0117)
Main income: Large trading/retail -0.0746*** -0.0765***
(0.0050) (0.0084)
Main income: Services other than trade -0.1406*** -0.1388***
(0.0045) (0.0076)
Unemployment# -0.0150*** -0.0132*
(0.0017) (0.0070)
Constant -0.4712*** -0.4235***
(0.0249) (0.0412)
Observations 1,173,031 415,669
Notes: Standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1. Estimations include province, age and date of birth
fixed effects. # Unemployment rate by region.

55

56
Appendix 3: Projections of the determinants of female labour force participation
Female Household heads Female Married
Male Household heads Male
Female
Married
Divorced Male
Female
Divorced
Widowed Male Widowed
1
1
1
1
1
1
1
1
.8
.8
.8
.8
.8
.8
.8
.8
.6
.6
.6
.6
.6
.6
percent
percent
percent
percent
percent
percent
.4
.4
.4
.4 percent .6
.4
.4 percent .6
.4
.4
.2
.2
.2
.2
.2
.2
.2
.2
0
0
0
0
0
0
0
0
2015 2020 2025 2015 2015 2020 2020 2025 2025 20152015 20202020 20252025 2015
2015 20202020 2025
2025 2015 2020 2025
time time time time time timetime time
Female at least primary Female

Maleatatleast
leastlower
primary
secondary Male
Female
at least
at least
lower
upper
secondary
secondary Male atFemale
least upper
at least
secondary
tertiary Male at least tertiary
1
1
1
1
1
1
1
1
.8
.8
.8
.8
.8
.8
.8
.8
.6
.6
.6
.6
.6
percent
percent
percent
percent
percent
.4
.4 percent .6
.4
.4 percent .6
.4
.4 percent .6
.4
.4
.2
.2
.2
.2
.2
.2
.2
.2
0
0
0
0
0
0
0
0
2015 2020 2025 2015

2015 2020
2020 2025
2025 20152015 20202020 2025
2025 20152015 20202020 20252025 2015 2020 2025
time time
time timetime timetime time

Female average household size Babysitters Elderly female Elderly male
5
1
1
1
4
.8
.8
.8
3
.6
.6
.6
percent
percent
percent
percent
2
.4
.4
.4
1
.2
.2
.2
0
0
0
0
2015 2020 2025 2015 2020 2025 2015 2020 2025 2015 2020 2025
time time time time
HH average children 0-2 HH average children 3-6 HH average children 7-11 HH average children 12-17
1
1
1
1
.8
.8
.8
.8
.6
.6
.6
.6
percent
percent
percent
percent
.4
.4
.4
.4
.2
.2
.2
.2
0
0
0
0
2015 2020 2025 2015 2020 2025 2015 2020 2025 2015 2020 2025
time time time time
57

58
Living in urban Distance to market Mining industry Manufacture industry
1
1
1
1
.8
.8
.8
.8
.6
.6
.6
.6
percent
percent
percent
proportion
.4
.4
.4
.4
.2
.2
.2
.2
0
0
0
0
2015 2020 2025 2015 2020 2025 2015 2020 2025 2015 2020 2025
time time time time
trade/retail industry services industry
1
1
.8
.8
.6
.6
percent
percent
.4
.4
.2
.2
0
0
2015 2020 2025 2015 2020 2025
time time


Appendix 4: Gender inequality in unemployment rates

Given that we found that women from younger cohorts have been increasing their labour force
participation compared to their older counterparts, in this appendix we investigate if young women
face more challenges than young men in terms finding employment. Higher youth unemployment
relative to the total unemployment is a challenge faced by many developed and developing economies,
particularly during periods of crisis (Scarpetta, Sonnet, & Manfredi, 2010). Indonesia is no exception
(Allen, 2016). Figure A4-1 shows the Indonesian unemployment rate since 1991. The green line shows
the total unemployment rate as a proportion of the total labour force. The red and blue lines show
the youth unemployment rate for females and males respectively (where youth is defined as being
between the ages of aged 15 to 24). Youth unemployment is significantly higher that total
unemployment, with young women appearing more vulnerable than young men in periods of
increased unemployment.
Figure A4 - 1 Unemployment Rate in Indonesia (Modeled ILO estimate)
In this appendix, we estimate the gender differences in unemployment for youth controlling for
observed characteristics. Using a similar method and the same data source as in Section 3.2 we
examine how female youth unemployment has changed relative to that of similarly aged males. This
method allows us to extract the trend and life cycle patterns once accounting for changes in other
important factors like increases in female educational attainment relative to men and changes in the
industrial structure by region. This is important as the productive characteristics of the women have
changed rapidly in the last 20 years.

59

Table A4 - 1 Unemployment Descriptive Statistics
60
Total Urban Rural
Variables Male Female Male Female Male Female
Labour force participation 0.58 0.37 0.49 0.35 0.66 0.38
Unemployed 0.11 0.14 0.19 0.19 0.07 0.11
Household head 0.09 0.02 0.09 0.03 0.09 0.01
Marital status: Single 0.84 0.70 0.87 0.82 0.83 0.62
Marital status: Married 0.15 0.28 0.13 0.17 0.16 0.35
Marital status: Divorced 0.00 0.02 0.00 0.01 0.00 0.02
Marital status: Widowed 0.00 0.00 0.00 0.00 0.00 0.00
Education: Primary 0.32 0.30 0.20 0.18 0.38 0.38
Education: Lower secondary 0.43 0.42 0.51 0.51 0.38 0.36
Education: Upper secondary 0.10 0.10 0.18 0.17 0.06 0.06
Education: Tertiary 0.02 0.05 0.04 0.09 0.01 0.03
Household size 5.20 5.30 5.14
Babysitter 0.47 0.49 0.46
Number of elderly females 0.08 0.07 0.08
Number of elderly males 0.08 0.07 0.08
Number of children: 0 to 2 years old 0.21 0.19 0.22
Distance to nearest district office ('100km) 0.67 0.45 0.81
Main income: Agriculture 0.71 0.29 0.96
Main income: Mining/quarrying 0.01 0.01 0.00
Main income: Processing/industry 0.04 0.10 0.01
Main income: Large trading/retail 0.10 0.25 0.01
Main income: Services other than trade 0.14 0.34 0.02
#
Unemployment 3.62 4.01 3.38
Observations 186,548 117,220 64,770 48,074 121,778 69,146


A4-1. Data and methods
We use data from Susenas for years 1996, 2000, 2007, 2011 and 2013. This data set comprises
observations on 303,768 youth who are economically active and allows us to calculate youth
unemployment trends for cohorts born between 1974 and 1998 and to look at changes in
unemployment over the life cycle from age 15 to 24.
48
Table A4-1 shows the main characteristics at the individual, household and village levels. We find
that in the total sample 14% of the women are unemployed while 11% of men are unemployed.
However, in urban areas there is little gender gap in youth unemployment. The women differ in some
respects from the men. A greater proportion of women aged 15 to 24 are married than men, this is
true in urban and rural areas but the difference is more pronounced in rural areas. Women on average
have higher education attainment, particularly in urban areas. Table A4-5 (at the end of this appendix)
shows the descriptive statistics for different years. The most important feature to highlight is the
increase in educational attainment over time. We also observed a reduction in household size and in
the number of children within households, reflecting fertility declines.
Using a pooled sample, we estimate the probit model presented in equation 5.
Equation 5 Youth Unemployment Probit Model
!"#$%& = () + +,& ( + 12
.345 -. /.& + 0&
where !"#$%& is an indicator variable with value of 1 if the person 6 is unemployed or 0 otherwise.
+& is a set of individual, household and village characteristics, including province fixed effects; /.& is
an age indicator variable and 0& is a random disturbance term. Please note that the variables included
in X are the ones listed in table A4-1.
A4-2. Results
Table A4-2 presents the marginal effect of each variable on the probability of being unemployed. The
first column shows the result of estimating equation 5 over the pooled sample of men and women
aged 15 to 24 years. It shows that women are 2.4 percentage points (21%) more likely to be
unemployed than otherwise similar men. We then estimate equation 5 separately for females and
males. The results are presented in Columns 2 and 3 respectively. We find that both genders have
higher probability of unemployment in urban areas compared to rural, slightly more so for men. The
effect of educational attainment on unemployment also looks similar for both genders, with higher
levels of education being associated with higher probabilities of being unemployed. This likely reflects
the socio-economic status of individuals as poorer (and less educated individuals) are unable to afford
to be unemployed and instead are forced to generate employment, often through very small
enterprises in the informal market.
In terms of household composition, we find that either increasing the number of people over 64 or
under 17 slightly decreases the probability of being unemployed. For example, for each extra child
aged 0 to 2 the probability of being unemployed decreases by 0.7% for women and 1.3% for men.
Finally, the distance to the nearest district capital decreases the unemployment probability for men

61


Table A4 - 2 Unemployment Marginal Effects - Total
Total
VARIABLES Female Male

Female 0.0240***
(0.0011)
Urban 0.0190*** 0.0444***
(0.0028) (0.0020)
Household head -0.0575*** -0.0570*** -0.0498***
(0.0020) (0.0048) (0.0023)
Marital status: Married -0.0637*** -0.0768*** -0.0577***
(0.0013) (0.0023) (0.0016)
Marital status: Divorced -0.0188*** -0.0280*** -0.0127
(0.0052) (0.0067) (0.0097)
Marital status: Widowed -0.0339*** -0.0421** -0.0295
(0.0127) (0.0178) (0.0188)
Education: Primary 0.0252*** 0.0350*** 0.0188***
(0.0024) (0.0044) (0.0027)
Education: Lower secondary 0.1075*** 0.1340*** 0.0848***
(0.0024) (0.0044) (0.0027)
Education: Upper secondary 0.1808*** 0.2012*** 0.1487***
(0.0046) (0.0079) (0.0054)
Education: Tertiary 0.2696*** 0.2740*** 0.2672***
(0.0072) (0.0104) (0.0106)
Household size 0.0064*** 0.0066*** 0.0067***
(0.0004) (0.0007) (0.0005)
Babysitter 0.0037*** 0.0056*** 0.0026**
(0.0011) (0.0020) (0.0013)
Number of elderly females -0.0090*** -0.0132*** -0.0066***
(0.0020) (0.0035) (0.0023)
Number of elderly males -0.0057*** -0.0039 -0.0054**
(0.0020) (0.0035) (0.0023)
Number of children: 0 to 2 years old -0.0099*** -0.0071*** -0.0128***
(0.0015) (0.0025) (0.0018)
(0.0012) (0.0021) (0.0015)
(0.0010) (0.0017) (0.0011)
(0.0008) (0.0014) (0.0009)
Distance to nearest district office
('100km) -0.0058*** -0.0024 -0.0059***
(0.0009) (0.0016) (0.0011)
Main income: Mining/quarrying 0.0523*** 0.0125 0.0440***
(0.0092) (0.0138) (0.0104)
Main income: Processing/industry 0.0140*** -0.0217*** 0.0045
(0.0027) (0.0040) (0.0032)
Main income: Large trading/retail 0.0492*** 0.0069* 0.0283***
(0.0021) (0.0036) (0.0027)
Main income: Services other than trade 0.0568*** 0.0133*** 0.0378***
(0.0019) (0.0033) (0.0026)
#
Unemployment 0.0221*** 0.0298*** 0.0184***
(0.0005) (0.0008) (0.0005)
Observations 303,768 117,220 186,548

62


Notes: Standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1. Estimations include
#
province and age fixed effects. Unemployment rate by region.
Table A4 - 3 Unemployment Marginal Effects Rural and Urban
Rural Urban
VARIABLES Female Male Female Male

Household head -0.0373*** -0.0317*** -0.0797*** -0.0868***
(0.0072) (0.0023) (0.0083) (0.0059)
Marital status: Married -0.0728*** -0.0381*** -0.0750*** -0.1084***
(0.0024) (0.0015) (0.0048) (0.0042)
Marital status: Divorced -0.0272*** -0.0078 -0.0406*** -0.0436*
(0.0056) (0.0081) (0.0153) (0.0259)
Marital status: Widowed -0.0226 -0.0163 -0.1122*** -0.0710
(0.0170) (0.0173) (0.0315) (0.0478)
Education: Primary 0.0261*** 0.0105*** 0.0135 0.0311***
(0.0039) (0.0022) (0.0108) (0.0081)
Education: Lower secondary 0.1051*** 0.0627*** 0.1379*** 0.1219***
(0.0046) (0.0026) (0.0096) (0.0069)
Education: Upper secondary 0.1988*** 0.1506*** 0.1775*** 0.1734***
(0.0105) (0.0071) (0.0140) (0.0102)
Education: Tertiary 0.2151*** 0.2831*** 0.2820*** 0.3121***
(0.0143) (0.0177) (0.0172) (0.0158)
Household size 0.0089*** 0.0055*** 0.0038*** 0.0089***
(0.0009) (0.0005) (0.0012) (0.0012)
Babysitter -0.0029 -0.0023* 0.0207*** 0.0173***
(0.0021) (0.0012) (0.0037) (0.0031)
Number of elderly females -0.0146*** -0.0089*** -0.0092 -0.0015
(0.0037) (0.0022) (0.0066) (0.0055)
Number of elderly males -0.0051 -0.0050** -0.0022 -0.0055
(0.0037) (0.0021) (0.0069) (0.0057)
Number of children: 0 to 2 years old -0.0045* -0.0088*** -0.0158*** -0.0233***
(0.0026) (0.0018) (0.0048) (0.0044)
Number of children: 3 to 6 years old -0.0120*** -0.0071*** -0.0116*** -0.0190***
(0.0022) (0.0014) (0.0041) (0.0036)
Number of children: 7 to 11 years old -0.0092*** -0.0066*** 0.0005 -0.0132***
(0.0019) (0.0011) (0.0033) (0.0028)
Number of children: 12 to 17 years old -0.0116*** -0.0071*** 0.0044* -0.0063***
(0.0016) (0.0009) (0.0026) (0.0022)
Distance to nearest district office ('100km) -0.0002 -0.0025*** -0.0050 -0.0132***
(0.0015) (0.0010) (0.0036) (0.0031)
Main income: Mining/quarrying 0.0489** 0.0425*** -0.0293 0.0486***
(0.0239) (0.0145) (0.0187) (0.0182)
Main income: Processing/industry -0.0129* 0.0078 -0.0239*** 0.0145**
(0.0076) (0.0061) (0.0063) (0.0060)
Main income: Large trading/retail 0.0533*** 0.0388*** -0.0051 0.0357***
(0.0136) (0.0083) (0.0049) (0.0044)
Main income: Services other than trade 0.0490*** 0.0519*** 0.0010 0.0487***
(0.0089) (0.0063) (0.0047) (0.0041)
#
Unemployment 0.0195*** 0.0114*** 0.0438*** 0.0339***
(0.0009) (0.0005) (0.0015) (0.0013)
Observations 69,146 121,778 48,074 64,770
Notes: Standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1. Estimations include province
#
and age fixed effects. Unemployment rate by region.

63


but not for women. In terms of industrial structure, villages with agriculture as the main industry are
associated with the lowest unemployment for men. For women however, manufacturing is associated
with a 2.2 percentage point lower probability of unemployment than if agriculture was the main
industry.
Table A4-3 shows the results when we separate urban from rural.49 Similar patterns are observed in
both urban and rural areas. The results suggest that while youth are generally finding it hard to find
employment, in particular those who are more educated, men and women face similar challenges.
A4-3. Age and Cohort Effects

Figure A4-1 showed higher youth unemployment for women than for men. In this section we report
the results of estimating age and cohort effects (as we did for labour force participation in the main
body of the report). The cohort effects identify trends in youth unemployment, independent of other
individual, household and village characteristics and are presented in Figure A4-2. The figure shows
that youth unemployment has been decreasing over time, ceteris paribus, and that the trend is similar
for women and men. The age effect panel presented on the right shows that the probability of being
unemployed increases from age 15 to 18 and then decreases with age. The peak at age 18 coincides
with the age at which schooling ceases. By age 24 the probability of being unemployed has decreased
to be half of that at age 15.
Figure A4 - 2 Predicted probability of youth unemployment in Indonesia
Figure A4-3 and A4-4 show the youth unemployment trend and life cycle pattern disaggregated by
rural/urban. We observe that in rural areas youth unemployment has remained roughly constant over
the period under analysis and the probability of unemployment in slightly higher for women than for
men, holding other factors constant. This is very different than in urban areas where we observe little
difference between men and women in terms of youth unemployment and large declines in youth
unemployment for both men and women. While the probability of being unemployed in urban areas
for people born in the late 70s was around 23%, for people born in the late 90s the probability of
unemployment is around 10% (controlling for age and other factors). The life cycle pattern is similar
in urban and rural areas, following the pattern described above.

64


Figure A4 - 3 Predicted probability of youth unemployment for rural areas
Figure A4 - 4 Predicted probability of youth unemployment for urban areas

A4-4. Conclusion
Our examination of gender differences in youth unemployment finds that youth unemployment is
higher than for the general population and particularly high among the better educated. However,
there is little in the way of a gender gap. A small gap is evident only in rural areas. This implies that
both young men and women face similar challenges in terms of finding employment early in their
working lives. This is concerning in terms of the ability of the labour market to absorb new workers,
particularly more skilled and productive workers. That both young men and young women are facing
the same challenges is however consistent with our earlier finding that cultural change over is
reducing the gap between men and women’s labour force participation rates. In terms of
unemployment, at the younger end of the job market it seems that men and women’s experiences do
not diverge as considerably as they did in the past.

65


A4-5. Methodological Note on the reliability of the Susenas unemployment
rates
In Indonesia the national labour market indicators are calculated using information from the Sakernas
survey. The questions used to calculate the unemployment rate change across survey years and differ
between the Susenas and the Sakernas. For this study we use the information collected in the Susenas
survey as it allows us to control for household composition, particularly the existence of children. The
definition for labour force participation (LFP) and Unemployment used for this study is as follows – we
will call this later the simple definition:
Labour Force Participation is calculated as the total number of people aged 15 or more who are:
• Working in the reference week

• Not working but have a job in the reference week
• Looking for a job or opening a business in the reference week
• Worked for at least one hour in the reference week (this information is only available in
1996 and 2000).
Unemployment is calculated as the number of people aged 15 or more who:
• Are not working or did not have a job in the reference week (or did not work for at least one
hour in 1996 and 2000)
• AND, are looking for a job or open a business in the reference week
After 2001 there was a change in the unemployment definition in Indonesia. Since then, (i)
discouraged workers, (ii) people who have a job but have not started working, and (iii) people
preparing a business are classified as unemployed and included in the labour force (Suryadarma,
Suryahadi, & Sumarto, 2005). The questions required to implement this change in the definition are
not available in the Susenas questionnaire. See table A4 – 4 for a question comparison.
Note that the definition used differs from the most recent definition used by the Indonesian Statistical
Agency (BPS) in which being unemployed is defined50 to include:
• Person without work but looking for work.

51
• Person without work who is establishing a new business/firm.
• Person without work who was not looking for work, because they do not expect to find work.
• Person who has made arrangements to start work on a date subsequent to the reference period
(future starts).

Differences in the measurement of unemployment rates in this study compared to the national official
rates reflect differences in the way the questions are worded, sampling differences and the lack of
questions required to implement the official definition by BPS. In order to estimate the impact on the
estimations due to the use of the Susenas instead of the Sakernas, we first replicate the national
official rates using Sakernas and then calculate the unemployment rate using Sakernas and the simple
definition. Figure A4 – 5 shows the BPS official rate with a blue line. The red triangles show the result
of calculating the unemployment rate using the BPS definition and the Sakernas survey. Notice that
the definition before 2001 was the simple definition. The blue squares are the result of calculating the
unemployment rate using Sakernas and the simple definition. Finally, the orange dots are the result
of calculating the unemployment rate using the Susenas and the simple definition. The difference

66


between the Sakernas and Sakernas BPS definition represents the differences in measurement due to
changes in the definition. While the difference between Susenas and Sakernas is the result of using
the different surveys (different samples and methodologies).
Figure A4 - 5 Total Unemployment Rate (% of total labour force)

67

Table A4 - 4 Labour Force Questions in Susenas and Sakernas
68
SUSENAS SAKERNAS
1996 2000 2007 2011 2013 1996 2000 2007 2010 2011 2013
Working Q20a Q19a1 Q24a1 Q24a1 Q24a1 Q2a1 Q2a1 Q2a1 Q2a1 Q2a1
Mainly
School Q20b Q19a2 Q24a2 Q24a2 Q24a2 Q2a2 Q2a2 Q2a2 Q2a2 Q2a2
activity
House Q20c Q19a3 Q24a3 Q24a3 Q24a3 Q2a3 Q2a3 Q2a3 Q2a3 Q2a3
last week
Other Q20d Q19a4 Q24a4 Q24a4 Q24a4 Q2a4 Q2a4 Q2a4 Q2a4 Q2a4
What was the main activity last week Q19b Q24b Q24b Q24b Q3 Q2b Q2b Q2b Q2b Q2b
Did you work at least 1 hour during the
Q21 Q20 Q4 Q3
previous week
If not working last week, do you have a Q21 Q25 Q25 Q25 Q3 Q3 Q3 Q3
permanent jobs but were temporary not Q22 job/busi job/busi job/busi job/busi Q5 Q4 job/busi job/busi job/busi job/busi
working? ness ness ness ness ness ness ness ness
Q26 Q26 Q26
Were you looking for a job last week? Q27 Q22 job/busi job/busi job/busi Q14 Q5 Q4 Q4 Q4 Q4
ness ness ness
Did you stablished a new business last
week? Q5 Q5 Q5 Q5
If Main reason for looking a job Q15 Q19 Q18 Q19 Q19
working efforts been made to find job/bus Q17 Q16 & Q17 Q20 Q19 Q20 Q20
or no For how long have you been
working looking? Q18 Q21 Q20 Q21 Q21
but Type of work you are looking for? Q18 Q22 Q21 Q22 Q22
If not Main reason for not looking a job Q15 Q19 Q23 Q22 Q6 Q6
working If offered a job would you accept Q16 Q20 Q24 Q23a Q7 Q7
and not Are you willing to work abroad Q23b
Notes Reference period: Last week Reference period: week ago

Table A4 - 5 Youth Descriptive Statistics by Year
1996 2000 2007 2011 2013

Variables Male Female Male Female Male Female Male Female Male Female
Labour force participation 0.60 0.40 0.56 0.34 0.61 0.39 0.57 0.35 0.54 0.33
Unemployed 0.14 0.19 0.13 0.14 0.10 0.13 0.09 0.11 0.10 0.13
Household head 0.08 0.01 0.10 0.02 0.09 0.02 0.09 0.02 0.07 0.02
Marital status: Single 0.87 0.75 0.84 0.72 0.84 0.69 0.83 0.67 0.84 0.71
Marital status: Married 0.12 0.23 0.16 0.26 0.15 0.29 0.17 0.31 0.15 0.27
Marital status: Divorced 0.00 0.02 0.00 0.02 0.00 0.02 0.00 0.02 0.00 0.02
Marital status: Widowed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Education: At least primary 0.41 0.41 0.37 0.37 0.29 0.27 0.26 0.21 0.23 0.16
Education: At least lower secondary 0.34 0.32 0.40 0.39 0.47 0.47 0.46 0.48 0.48 0.50
Education: At least upper secondary 0.07 0.08 0.08 0.09 0.11 0.11 0.12 0.12 0.15 0.16
Education: At least tertiary 0.01 0.01 0.01 0.02 0.02 0.07 0.03 0.09 0.04 0.11
Household size 5.54 5.16 5.17 5.01 4.93
Babysitter 0.46 0.45 0.46 0.48 0.51
Number of elderly females 0.08 0.08 0.08 0.07 0.07
Number of elderly males 0.09 0.09 0.07 0.07 0.07
Number of children: 0 to 2 years old 0.20 0.18 0.22 0.21 0.20
Distance to nearest district office ('100km) 0.67 0.54 0.68 0.76 0.74
Main income: Agriculture 0.72 0.71 0.70 0.71 0.83
Main income: Mining/quarrying 0.00 0.00 0.01 0.01 0.00
Main income: Processing/industry 0.03 0.04 0.05 0.05 0.02
Main income: Large trading/retail 0.09 0.11 0.11 0.09 0.04
Main income: Services other than trade 0.16 0.13 0.13 0.13 0.11
#
Unemployment 5.00 3.96 3.33 2.66 2.73
Observations 41,024 28,538 31,486 19,119 54,321 34,138 48,643 28,985 11,074 6,440

69

Table A4 - 6 Youth Unemployment Marginal Effects by Year
70
1996 2000 2007 2011 2013
VARIABLES Female Male Female Male Female Male Female Male Female Male
Urban 0.0413*** 0.0707*** 0.0267*** 0.0574*** 0.0214*** 0.0431*** 0.0064 0.0336*** -0.0024 0.0365***
(0.0082) (0.0062) (0.0065) (0.0050) (0.0054) (0.0036) (0.0047) (0.0032) (0.0089) (0.0058)
-
Household head
0.0938*** -0.0778*** -0.0662*** -0.0694*** -0.0637*** -0.0447*** -0.0394*** -0.0419*** -0.0234 -0.0502***
(0.0115) (0.0055) (0.0094) (0.0054) (0.0078) (0.0038) (0.0082) (0.0037) (0.0259) (0.0082)
-
Marital status: Married
0.0836*** -0.0751*** -0.0990*** -0.0643*** -0.0581*** -0.0513*** -0.0722*** -0.0457*** -0.0970*** -0.0489***
(0.0057) (0.0045) (0.0051) (0.0048) (0.0043) (0.0028) (0.0040) (0.0028) (0.0086) (0.0060)
Marital status: Divorced -0.0352** 0.0049 -0.0446*** 0.0063 -0.0148 -0.0267* -0.0175 -0.0027 -0.0044 -0.0372
(0.0164) (0.0285) (0.0143) (0.0309) (0.0142) (0.0147) (0.0119) (0.0171) (0.0278) (0.0333)
Marital status: Widowed -0.0439 -0.0828*** -0.0671* 0.0122 -0.0116 0.0029 -0.0605*** -0.0455** -0.0006 0.0133
(0.0414) (0.0317) (0.0377) (0.0756) (0.0424) (0.0427) (0.0204) (0.0196) (0.0972) (0.0892)
Education: Primary 0.0247*** 0.0264*** 0.0422*** 0.0350*** 0.0622*** 0.0199*** 0.0530*** 0.0271*** 0.0407 0.0006
(0.0076) (0.0054) (0.0104) (0.0072) (0.0109) (0.0056) (0.0112) (0.0056) (0.0284) (0.0112)
Education: Lower secondary 0.1802*** 0.1171*** 0.1426*** 0.1117*** 0.1610*** 0.0830*** 0.1140*** 0.0675*** 0.1066*** 0.0579***
(0.0091) (0.0065) (0.0112) (0.0076) (0.0094) (0.0052) (0.0088) (0.0048) (0.0220) (0.0103)
Education: Upper secondary 0.2415*** 0.1725*** 0.2202*** 0.2190*** 0.2609*** 0.1721*** 0.1693*** 0.1153*** 0.1466*** 0.0924***
(0.0149) (0.0121) (0.0202) (0.0153) (0.0180) (0.0114) (0.0168) (0.0095) (0.0365) (0.0178)
Education: Tertiary 0.3451*** 0.2802*** 0.3870*** 0.4271*** 0.2907*** 0.2427*** 0.2795*** 0.2414*** 0.3134*** 0.3103***
(0.0284) (0.0335) (0.0341) (0.0334) (0.0210) (0.0190) (0.0212) (0.0184) (0.0481) (0.0384)
Household size 0.0067*** 0.0063*** 0.0092*** 0.0051*** 0.0005 0.0042*** 0.0027** 0.0044*** 0.0106*** 0.0036
(0.0018) (0.0013) (0.0018) (0.0014) (0.0011) (0.0009) (0.0012) (0.0009) (0.0033) (0.0022)
Babysitter 0.0029 0.0037 0.0072 0.0014 0.0104*** 0.0046** 0.0084** 0.0021 0.0007 0.0050
(0.0047) (0.0032) (0.0048) (0.0034) (0.0035) (0.0022) (0.0034) (0.0022) (0.0079) (0.0049)
Number of elderly females -0.0167** -0.0194*** -0.0182** -0.0100* -0.0169*** 0.0004 -0.0037 0.0036 0.0061 -0.0070
(0.0081) (0.0058) (0.0079) (0.0059) (0.0065) (0.0038) (0.0065) (0.0041) (0.0143) (0.0092)
Number of elderly males -0.0085 -0.0109** -0.0130 -0.0007 0.0081 -0.0040 -0.0057 -0.0053 -0.0054 -0.0149
(0.0079) (0.0055) (0.0080) (0.0058) (0.0066) (0.0040) (0.0067) (0.0043) (0.0156) (0.0098)

-
Number of children: 0 to 2 years old
0.0195*** -0.0160*** -0.0076 -0.0135*** -0.0055 -0.0086*** 0.0094** -0.0078** -0.0190* -0.0097
(0.0059) (0.0045) (0.0065) (0.0052) (0.0043) (0.0031) (0.0043) (0.0032) (0.0111) (0.0074)
Number of children: 3 to 6 years old -0.0115** -0.0129*** -0.0154*** -0.0087** -0.0097** -0.0081*** -0.0025 -0.0071*** -0.0085 0.0064
(0.0048) (0.0035) (0.0053) (0.0041) (0.0038) (0.0026) (0.0037) (0.0027) (0.0092) (0.0060)
Number of children: 7 to 11 years old -0.0042 -0.0087*** -0.0058 -0.0148*** -0.0007 -0.0034* -0.0002 -0.0069*** -0.0086 -0.0069
(0.0039) (0.0026) (0.0043) (0.0032) (0.0032) (0.0020) (0.0031) (0.0020) (0.0075) (0.0047)
Number of children: 12 to 17 years old -0.0049 -0.0097*** -0.0056 -0.0066*** -0.0002 -0.0055*** -0.0020 -0.0081*** -0.0149** -0.0069*
(0.0032) (0.0022) (0.0034) (0.0025) (0.0026) (0.0016) (0.0026) (0.0017) (0.0063) (0.0039)
Distance to nearest district office
('100km) -0.0070** -0.0058** -0.0037 -0.0088** -0.0029 -0.0067*** 0.0032* -0.0083*** 0.0057 -0.0066**
(0.0030) (0.0023) (0.0050) (0.0035) (0.0028) (0.0019) (0.0019) (0.0014) (0.0048) (0.0032)
Main income: Mining/quarrying 0.1151** 0.0270 -0.0189 0.0294 0.0143 0.0138 0.0020 0.0316** 0.0443
(0.0572) (0.0337) (0.0370) (0.0279) (0.0241) (0.0137) (0.0161) (0.0124) (0.0783)
-
Main income: Processing/industry
0.0488*** -0.0038 -0.0305*** 0.0019 -0.0186*** 0.0210*** -0.0307*** 0.0027 -0.0097 -0.0022
(0.0104) (0.0093) (0.0086) (0.0084) (0.0071) (0.0060) (0.0056) (0.0049) (0.0199) (0.0138)
Main income: Large trading/retail -0.0081 0.0372*** -0.0075 0.0193*** -0.0019 0.0193*** -0.0158*** 0.0082* -0.0280* -0.0086
(0.0093) (0.0077) (0.0074) (0.0064) (0.0063) (0.0044) (0.0054) (0.0043) (0.0148) (0.0108)
Main income: Services other than trade 0.0225** 0.0635*** -0.0019 0.0251*** 0.0004 0.0298*** -0.0117** 0.0132*** -0.0072 -0.0077
(0.0089) (0.0072) (0.0071) (0.0061) (0.0060) (0.0045) (0.0051) (0.0039) (0.0110) (0.0072)
Unemployment# 0.0178*** 0.0108*** 0.0101*** 0.0147*** 0.0145*** 0.0181*** 0.0226*** 0.0218*** 0.0177*** 0.0229***
(0.0011) (0.0008) (0.0012) (0.0009) (0.0012) (0.0007) (0.0014) (0.0009) (0.0035) (0.0022)
Observations 28,538 41,024 19,119 31,486 34,138 54,321 28,985 48,643 6,432 11,074
Notes: Standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1. Estimations include age fixed effects. # Unemployment rate by region.

71

72
Appendix 5: Gender wage gap along the distribution by status of employment
Table A5 - 1 Unconditional Quantile Regression Coefficients by Gender in the Formal Sector
Q10 Q30 Q70 Q90

VARIABLES Male Female Male Female Male Female Male Female
Years of experience 0.0362*** 0.0361*** 0.0287*** 0.0461*** 0.0572*** 0.0729*** 0.0517*** 0.0686***
(0.0001) (0.0002) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
2
Years of experience /100 -0.0537*** -0.0484*** -0.0395*** -0.0669*** -0.0751*** -0.0985*** -0.0630*** -0.0780***
(0.0002) (0.0005) (0.0001) (0.0003) (0.0001) (0.0002) (0.0002) (0.0003)
Married 0.2997*** 0.1695*** 0.2114*** 0.1470*** 0.1640*** 0.0742*** 0.0222*** 0.0297***
(0.0008) (0.0011) (0.0005) (0.0008) (0.0006) (0.0007) (0.0006) (0.0009)
Urban 0.1708*** 0.2044*** 0.1277*** 0.2696*** 0.0872*** 0.0908*** 0.0835*** 0.0415***
(0.0007) (0.0013) (0.0004) (0.0009) (0.0005) (0.0007) (0.0005) (0.0009)
Jakarta 0.2893*** 0.2126*** 0.3138*** 0.3397*** 0.3129*** 0.3273*** 0.2886*** 0.3119***
(0.0007) (0.0014) (0.0005) (0.0010) (0.0008) (0.0011) (0.0011) (0.0015)
Any health complaint -0.0582*** -0.0009 -0.0283*** -0.0369*** -0.0313*** -0.0222*** 0.0105*** 0.0425***
(0.0006) (0.0011) (0.0003) (0.0008) (0.0005) (0.0007) (0.0006) (0.0009)
Vocational training in HS 0.0553*** 0.0983*** 0.0129*** 0.0397*** -0.0429*** 0.0134*** -0.0108*** 0.0904***
(0.0007) (0.0013) (0.0005) (0.0013) (0.0007) (0.0013) (0.0008) (0.0013)
Used internet in the last 3 months 0.1332*** 0.2315*** 0.1498*** 0.2621*** 0.3753*** 0.3359*** 0.3460*** 0.2177***
(0.0006) (0.0009) (0.0004) (0.0009) (0.0006) (0.0010) (0.0009) (0.0013)
Employer assisted by permanent
paid 0.1967*** 0.2555*** 0.2733*** 0.4920*** 0.6202*** 0.6421*** 0.6742*** 0.4848***
(0.0008) (0.0020) (0.0005) (0.0019) (0.0009) (0.0022) (0.0013) (0.0030)
Primary 0.1524*** 0.3473*** 0.0808*** 0.2727*** 0.0818*** 0.1937*** 0.0769*** 0.2417***
(0.0014) (0.0030) (0.0007) (0.0019) (0.0008) (0.0011) (0.0008) (0.0011)
Junior HS 0.3503*** 0.7297*** 0.2638*** 0.8129*** 0.2564*** 0.5584*** 0.1953*** 0.5623***
(0.0015) (0.0032) (0.0008) (0.0021) (0.0008) (0.0012) (0.0009) (0.0013)
Senior HS 0.6332*** 1.2775*** 0.5445*** 1.5322*** 0.6554*** 1.0620*** 0.3834*** 0.7644***
(0.0014) (0.0030) (0.0008) (0.0020) (0.0009) (0.0014) (0.0010) (0.0016)

Diploma I/II 0.7202*** 1.5070*** 0.6979*** 1.8719*** 1.1971*** 1.7280*** 0.8758*** 1.3126***
(0.0026) (0.0035) (0.0014) (0.0026) (0.0023) (0.0024) (0.0033) (0.0034)
Dip.III/IV/S1 0.8071*** 1.6201*** 0.7534*** 2.0236*** 1.4687*** 2.1004*** 1.3353*** 1.6316***
(0.0015) (0.0031) (0.0008) (0.0020) (0.0011) (0.0015) (0.0015) (0.0021)
Postgraduate 0.8462*** 1.6346*** 0.7602*** 2.1022*** 1.8085*** 2.5506*** 2.6187*** 3.1969***
(0.0017) (0.0033) (0.0010) (0.0024) (0.0016) (0.0025) (0.0042) (0.0065)
Constant 6.4303*** 6.3200*** 7.3486*** 6.5062*** 7.5833*** 7.1437*** 8.5962*** 8.1199***
(0.0027) (0.0048) (0.0013) (0.0035) (0.0014) (0.0023) (0.0016) (0.0026)
Observations 27,127,539 12,872,858 27,127,539 12,872,858 27,127,539 12,872,858 27,127,539 12,872,858
R-squared 0.1028 0.1300 0.2054 0.2771 0.3112 0.3967 0.2002 0.2231
Notes: Years of experience is calculated using age- years of education -Number of career interruptions -5. In sector the reference category is paid worker/employee. In
education no schooling is the reference category. We include regional and industry fixed effects. Standard errors in parentheses. Significance levels *** p<0.01, ** p<0.05,
* p<0.1.

73

Table A5 - 2 Unconditional Quantile Regression Coefficients by Gender in the Informal Sector
74
Q10 Q30 Q70 Q90
VARIABLES Male Female Male Female Male Female Male Female
Years of experience 0.0188*** 0.0294*** 0.0179*** 0.0261*** 0.0189*** 0.0336*** 0.0191*** 0.0387***
(0.0001) (0.0002) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0002)
2
Years of experience /100 -0.0319*** -0.0426*** -0.0281*** -0.0371*** -0.0264*** -0.0498*** -0.0257*** -0.0576***
(0.0002) (0.0003) (0.0001) (0.0002) (0.0001) (0.0002) (0.0002) (0.0004)
Married 0.2155*** -0.0584*** 0.1563*** -0.0495*** 0.1359*** -0.0651*** 0.1380*** -0.0804***
(0.0010) (0.0010) (0.0006) (0.0007) (0.0006) (0.0008) (0.0007) (0.0014)
Urban 0.1247*** 0.1955*** 0.1178*** 0.1684*** 0.0863*** 0.1308*** 0.0487*** 0.1070***
(0.0006) (0.0010) (0.0004) (0.0007) (0.0004) (0.0007) (0.0005) (0.0011)
Jakarta 0.1934*** 0.3356*** 0.3000*** 0.4274*** 0.4413*** 0.4991*** 0.4013*** 0.5247***
(0.0011) (0.0013) (0.0009) (0.0013) (0.0013) (0.0022) (0.0022) (0.0041)
Any health complaint -0.0639*** -0.0794*** -0.0308*** -0.0599*** 0.0131*** -0.0249*** 0.0238*** -0.0073***
(0.0006) (0.0010) (0.0004) (0.0007) (0.0004) (0.0007) (0.0006) (0.0011)
Vocational training in HS -0.0062*** -0.0587*** -0.0502*** -0.0771*** -0.0967*** -0.0829*** -0.0816*** -0.1262***
(0.0011) (0.0023) (0.0009) (0.0017) (0.0010) (0.0020) (0.0015) (0.0036)
Used internet in the last 3 months 0.0951*** 0.1874*** 0.0933*** 0.2182*** 0.2764*** 0.3821*** 0.4490*** 0.8664***
(0.0012) (0.0023) (0.0009) (0.0018) (0.0011) (0.0024) (0.0020) (0.0055)
Self-employed 0.0387*** -0.1008*** -0.0140*** -0.0402*** -0.0486*** -0.0628*** -0.0756*** -0.1137***
(0.0007) (0.0010) (0.0004) (0.0007) (0.0005) (0.0008) (0.0008) (0.0014)
Casual worker 0.0205*** -0.0288*** -0.1046*** -0.1301*** -0.1890*** -0.2874*** -0.1997*** -0.4196***
(0.0009) (0.0015) (0.0006) (0.0010) (0.0005) (0.0010) (0.0007) (0.0017)
Primary 0.0805*** 0.0731*** 0.0641*** 0.0450*** 0.0435*** 0.0443*** 0.0394*** 0.0326***
(0.0008) (0.0012) (0.0005) (0.0008) (0.0005) (0.0008) (0.0006) (0.0013)
Junior HS 0.1459*** 0.1419*** 0.1253*** 0.1182*** 0.1424*** 0.1816*** 0.1285*** 0.2288***
(0.0009) (0.0016) (0.0006) (0.0011) (0.0006) (0.0011) (0.0008) (0.0019)
Senior HS 0.2006*** 0.2272*** 0.2141*** 0.2142*** 0.2863*** 0.3683*** 0.2779*** 0.4810***
(0.0010) (0.0017) (0.0007) (0.0012) (0.0007) (0.0014) (0.0011) (0.0025)

Diploma I/II 0.2505*** 0.3121*** 0.1878*** 0.2337*** 0.3524*** 0.5134*** 0.3075*** 0.5853***
(0.0043) (0.0050) (0.0035) (0.0042) (0.0042) (0.0055) (0.0069) (0.0106)
Diploma III/IV/S1 0.2415*** 0.3430*** 0.3208*** 0.3785*** 0.6276*** 0.7839*** 0.9404*** 1.3525***
(0.0016) (0.0028) (0.0012) (0.0021) (0.0017) (0.0029) (0.0033) (0.0067)
Postgraduate 0.0542*** 0.3968*** 0.3136*** 0.5404*** 0.9075*** 1.2245*** 2.1219*** 3.5187***
(0.0088) (0.0034) (0.0050) (0.0030) (0.0064) (0.0092) (0.0164) (0.0286)
Constant 7.0788*** 6.9333*** 7.8043*** 7.6335*** 8.6501*** 8.3729*** 9.3032*** 8.9971***
(0.0018) (0.0032) (0.0011) (0.0022) (0.0011) (0.0023) (0.0015) (0.0039)
Observations 26,707,731 10,389,466 26,707,731 10,389,466 26,707,731 10,389,466 26,707,731 10,389,466
R-squared 0.0532 0.0417 0.1104 0.0721 0.1468 0.1054 0.0899 0.0831
Notes: Years of experience is calculated using age- years of education -Number of career interruptions -5. In sector the references is employer assisted by temporary/unpaid. In
education no schooling is the reference category. We include regional and industry fixed effects. Standard errors in parentheses. Significance levels *** p<0.01, ** p<0.05, * p<0.1.

75


76
Table A5 - 3 Decomposition of the gender wage gap across the earning distribution
Formal Informal
VARIABLES
Q10 Q30 Q70 Q90 Q10 Q30 Q70 Q90
Raw difference 0.4860*** 0.3823*** 0.1875*** 0.1245*** 0.4873*** 0.4160*** 0.3755*** 0.3772***
(0.0005) (0.0004) (0.0005) (0.0005) (0.0005) (0.0004) (0.0004) (0.0006)
62.6% 46.6% 20.6% 13.3% 62.8% 51.6% 45.6% 45.8%
Total Explained 0.1901*** 0.1325*** 0.0570*** 0.0624*** 0.1144*** 0.0968*** 0.0795*** 0.1192***
(0.0002) (0.0002) (0.0003) (0.0003) (0.0002) (0.0002) (0.0002) (0.0003)
39% 35% 30% 50% 23% 23% 21% 32%
Total Unexplained 0.2959*** 0.2498*** 0.1306*** 0.0621*** 0.3729*** 0.3192*** 0.2960*** 0.2580***
(0.0005) (0.0003) (0.0003) (0.0004) (0.0004) (0.0003) (0.0003) (0.0005)
61% 65% 70% 50% 77% 77% 79% 68%
Observations 161,040 161,040 161,040 161,040 171,678 171,678 171,678 171,678
Contributions to the Explained Gap:
Experience 0.0820*** 0.0754*** 0.1393*** 0.1391*** -0.0016*** 0.0004*** 0.0028*** 0.0036***
(0.0001) (0.0001) (0.0001) (0.0002) (0.0001) (0.0000) (0.0000) (0.0001)
17% 20% 74% 112% 0% 0% 1% 1%
Married 0.0399*** 0.0314*** 0.0194*** 0.0026*** 0.0132*** 0.0102*** 0.0089*** 0.0077***
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0000) (0.0000) (0.0001)
8% 8% 10% 2% 3% 2% 2% 2%
Skills -0.0057*** -0.0076*** -0.0148*** -0.0105*** 0.0051*** 0.0037*** 0.0036*** 0.0054***
(0.0000) (0.0000) (0.0001) (0.0001) (0.0000) (0.0000) (0.0000) (0.0000)
-1% -2% -8% -8% 1% 1% 1% 1%
Education -0.0499*** -0.0646*** -0.1299*** -0.1174*** 0.0096*** 0.0085*** 0.0093*** 0.0087***
(0.0001) (0.0001) (0.0002) (0.0002) (0.0001) (0.0000) (0.0001) (0.0001)
-10% -17% -69% -94% 2% 2% 2% 2%
Region 0.0019*** 0.0003*** 0.0033*** -0.0014*** -0.0001* 0.0025*** 0.0064*** 0.0063***
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
0% 0% 2% -1% 0% 1% 2% 2%
Status of employment 0.0106*** 0.0159*** 0.0317*** 0.0324*** 0.0027*** -0.0027*** -0.0055*** -0.0043***
(0.0000) (0.0000) (0.0001) (0.0001) (0.0001) (0.0000) (0.0001) (0.0001)
2% 4% 17% 26% 1% -1% -1% -1%
Industry 0.1114*** 0.0817*** 0.0079*** 0.0175*** 0.0854*** 0.0742*** 0.0540*** 0.0917***
(0.0002) (0.0001) (0.0001) (0.0002) (0.0002) (0.0002) (0.0002) (0.0002)
23% 21% 4% 14% 18% 18% 14% 24%
raw difference
Notes: The raw difference in percentage is calculated as (e -1)×100. The percentages shown are the contribution to the total wage gap. Results are grouped as
2
experience (experience and experience/100 ), skills (vocational training and health status), and region (regional dummies, Jakarta dummy and urban dummy). Standard
errors in parentheses. Significance levels *** p<0.01, ** p<0.05, * p<0.1

Table A5 - 4 Decomposition of the gender wage gap across the earning distribution for people aged 15 to 29
Formal Informal
VARIABLES Q10 Q30 Q70 Q90 Q10 Q30 Q70 Q90
Raw difference 0.3569*** 0.2261*** 0.1056*** 0.0820*** 0.5876*** 0.5210*** 0.3602*** 0.3199***
(0.0004) (0.0005) (0.0005) (0.0008) (0.0012) (0.0008) (0.0009) (0.0015)
42.9% 25.4% 11.1% 8.5% 80.0% 68.4% 43.4% 37.7%
Total Explained 0.1017*** 0.0718*** 0.0091*** -0.0326*** 0.1878*** 0.1467*** 0.0678*** 0.0941***
(0.0002) (0.0003) (0.0003) (0.0005) (0.0005) (0.0004) (0.0005) (0.0007)
28% 32% 9% -40% 32% 28% 19% 29%
(0.0004) (0.0004) (0.0004) (0.0006) (0.0010) (0.0007) (0.0008) (0.0013)
72% 68% 91% 140% 68% 72% 81% 71%
Observations 55,473 55,473 55,473 55,473 31,161 31,161 31,161 31,161
Experience 0.0699*** 0.0661*** 0.0467*** 0.0460*** 0.0339*** 0.0295*** 0.0231*** 0.0144***
(0.0002) (0.0002) (0.0001) (0.0002) (0.0002) (0.0002) (0.0002) (0.0002)
20% 29% 44% 56% 6% 6% 6% 5%
Married 0.0014*** 0.0023*** 0.0021*** 0.0035*** -0.0011*** 0.0024*** -0.0075*** -0.0123***
(0.0000) (0.0000) (0.0000) (0.0001) (0.0002) (0.0001) (0.0002) (0.0002)
0% 1% 2% 4% 0% 0% -2% -4%
Skills -0.0043*** -0.0088*** -0.0146*** -0.0263*** 0.0035*** 0.0029*** 0.0023*** 0.0028***
(0.0000) (0.0001) (0.0001) (0.0001) (0.0001) (0.0000) (0.0001) (0.0001)
-1% -4% -14% -32% 1% 1% 1% 1%
Education -0.0542*** -0.0840*** -0.0912*** -0.1583*** -0.0162*** -0.0144*** -0.0227*** -0.0245***
(0.0002) (0.0002) (0.0002) (0.0004) (0.0001) (0.0001) (0.0002) (0.0002)
-15% -37% -86% -193% -3% -3% -6% -8%
Region -0.0013*** -0.0054*** -0.0087*** -0.0091*** 0.0067*** 0.0073*** 0.0093*** 0.0097***
(0.0001) (0.0001) (0.0001) (0.0001) (0.0002) (0.0002) (0.0002) (0.0003)
0% -2% -8% -11% 1% 1% 3% 3%
Status of employment 0.0023*** 0.0053*** 0.0083*** 0.0205*** -0.0009*** -0.0093*** -0.0257*** -0.0346***
(0.0000) (0.0000) (0.0000) (0.0001) (0.0002) (0.0001) (0.0002) (0.0002)
1% 2% 8% 25% 0% -2% -7% -11%
Industry 0.0879*** 0.0964*** 0.0666*** 0.0910*** 0.1618*** 0.1283*** 0.0889*** 0.1385***
(0.0002) (0.0002) (0.0002) (0.0003) (0.0005) (0.0003) (0.0004) (0.0007)
25% 43% 63% 111% 28% 25% 25% 43%
raw difference 2
Notes: The raw difference in percentage is calculated as (e -1)×100. The percentages shown are the contribution to the total wage gap. Results are grouped as experience (experience and experience/100 ),
skills (vocational training and health status), and region (regional dummies, Jakarta dummy and urban dummy). Standard errors in parentheses. Significance levels *** p<0.01, ** p<0.05, * p<0.1
77

78
Formal Informal
Raw difference 0.5625*** 0.4253*** 0.1204*** 0.1051*** 0.5211*** 0.4552*** 0.4005*** 0.3951***
(0.0007) (0.0007) (0.0008) (0.0008) (0.0007) (0.0005) (0.0006) (0.0010)
75.5% 53.0% 12.8% 11.1% 68.4% 57.6% 49.3% 48.5%
Total Explained 0.1692*** 0.1376*** 0.0225*** 0.0794*** 0.1419*** 0.1184*** 0.1101*** 0.1536***
(0.0003) (0.0004) (0.0005) (0.0005) (0.0004) (0.0003) (0.0003) (0.0005)
30% 32% 19% 76% 27% 26% 27% 39%
(0.0006) (0.0005) (0.0006) (0.0007) (0.0006) (0.0004) (0.0005) (0.0009)
70% 68% 81% 24% 73% 74% 73% 61%
Observations 68,681 68,681 68,681 68,681 75,547 75,547 75,547 75,547
Experience 0.0427*** 0.0480*** 0.0938*** 0.0985*** 0.0331*** 0.0295*** 0.0327*** 0.0346***
(0.0002) (0.0002) (0.0002) (0.0003) (0.0002) (0.0001) (0.0001) (0.0002)
8% 11% 78% 94% 6% 6% 8% 9%
Married 0.0249*** 0.0292*** 0.0300*** 0.0235*** 0.0129*** 0.0092*** 0.0070*** 0.0072***
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
4% 7% 25% 22% 2% 2% 2% 2%
Skills -0.0013*** -0.0045*** -0.0073*** -0.0063*** 0.0037*** 0.0027*** 0.0039*** 0.0067***
(0.0001) (0.0001) (0.0001) (0.0001) (0.0000) (0.0000) (0.0000) (0.0001)
0% -1% -6% -6% 1% 1% 1% 2%
Education -0.0157*** -0.0408*** -0.1379*** -0.1364*** 0.0061*** 0.0046*** 0.0043*** 0.0033***
(0.0002) (0.0003) (0.0004) (0.0004) (0.0001) (0.0001) (0.0001) (0.0001)
-3% -10% -115% -130% 1% 1% 1% 1%
Region 0.0049*** 0.0063*** 0.0090*** 0.0008*** -0.0005*** 0.0033*** 0.0081*** 0.0100***
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0002)
1% 1% 7% 1% 0% 1% 2% 3%
Status of employment 0.0137*** 0.0242*** 0.0375*** 0.0441*** 0.0009*** -0.0035*** -0.0052*** -0.0032***
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
2% 6% 31% 42% 0% -1% -1% -1%
Industry 0.1000*** 0.0752*** -0.0027*** 0.0553*** 0.0859*** 0.0727*** 0.0593*** 0.0950***
(0.0002) (0.0002) (0.0002) (0.0003) (0.0003) (0.0002) (0.0002) (0.0004)
18% 18% -2% 53% 16% 16% 15% 24%
raw difference
2

Formal Informal
Raw difference 0.6327*** 0.4795*** -0.0485*** 0.1109*** 0.3735*** 0.3246*** 0.3521*** 0.3737***
(0.0011) (0.0012) (0.0009) (0.0009) (0.0008) (0.0006) (0.0007) (0.0010)
88.3% 61.5% -4.7% 11.7% 45.3% 38.3% 42.2% 45.3%
Total Explained 0.2603*** 0.1951*** -0.0578*** 0.1005*** 0.1328*** 0.1221*** 0.1423*** 0.1812***
(0.0007) (0.0008) (0.0008) (0.0007) (0.0005) (0.0004) (0.0005) (0.0007)
41% 41% 119% 91% 36% 38% 40% 48%
(0.0008) (0.0008) (0.0007) (0.0007) (0.0006) (0.0005) (0.0005) (0.0007)
59% 59% -19% 9% 64% 62% 60% 52%
Observations 36,886 36,886 36,886 36,886 64,970 64,970 64,970 64,970
Experience 0.0621*** 0.0511*** 0.0730*** 0.0776*** 0.0208*** 0.0204*** 0.0205*** 0.0205***
(0.0003) (0.0003) (0.0004) (0.0005) (0.0003) (0.0002) (0.0002) (0.0003)
10% 11% -151% 70% 6% 6% 6% 5%
Married 0.0856*** 0.1001*** 0.0230*** 0.0115*** 0.0575*** 0.0499*** 0.0526*** 0.0414***
(0.0004) (0.0004) (0.0002) (0.0003) (0.0003) (0.0002) (0.0003) (0.0004)
14% 21% -47% 10% 15% 15% 15% 11%
Skills 0.0003*** 0.0021*** 0.0077*** 0.0082*** 0.0030*** 0.0024*** 0.0025*** 0.0072***
(0.0000) (0.0001) (0.0001) (0.0002) (0.0001) (0.0000) (0.0001) (0.0001)
0% 0% -16% 7% 1% 1% 1% 2%
Education 0.0107*** -0.0106*** -0.1145*** -0.0794*** 0.0231*** 0.0247*** 0.0301*** 0.0333***
(0.0004) (0.0005) (0.0006) (0.0005) (0.0001) (0.0001) (0.0001) (0.0002)
2% -2% 236% -72% 6% 8% 9% 9%
Region -0.0015*** 0.0014*** 0.0005*** -0.0035*** -0.0032*** -0.0026*** 0.0018*** 0.0040***
(0.0001) (0.0002) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0002)
0% 0% -1% -3% -1% -1% 1% 1%
Status of employment 0.0134*** 0.0294*** 0.0272*** 0.0280*** 0.0092*** 0.0098*** 0.0122*** 0.0145***
(0.0001) (0.0002) (0.0001) (0.0002) (0.0001) (0.0001) (0.0001) (0.0002)
2% 6% -56% 25% 2% 3% 3% 4%
Industry 0.0895*** 0.0215*** -0.0747*** 0.0582*** 0.0225*** 0.0174*** 0.0227*** 0.0602***
(0.0003) (0.0003) (0.0004) (0.0004) (0.0003) (0.0003) (0.0003) (0.0004)
14% 4% 154% 52% 6% 5% 6% 16%
raw difference
2
79


Endnotes

1
The authors of the report are Lisa Cameron (Monash) and Diana Contreras Suarez (Monash). Emily Sandilands
(DFAT) contributed to Chapter 2 and William Rowell (DFAT) to Chapter 3.
2
The main aim of the report is to quantify the magnitude of gender disparities and track their progress over
time in a way that is comparable between countries and across four different areas: health, education, economy
and politics.
3
Women’s work has of course been extensively examined by sociologists, anthropologists and feminist
researchers. These disciplines often differentiate between reproductive and productive work while emphasising
their interdependence. They emphasise that women’s traditional roles and activities that support the family are
often undervalued or ignored, for example work to build and maintain social and community networks. This is
undoubtedly true, and the role of women as mothers, caregivers and their community engagement shapes their
interactions with the labour market, Ford and Parker (2008). Drucilla K. Barker (2005) and Idrus (2008) argue
that the way work is commonly understood leads to underreporting of women’s economic contribution. For
example, women who farm at home for self-consumption or for small scale trade are often not viewed as being
engaged in income-generating work and therefore, this work is not reported as unpaid work. This would suggest
that female labour force participation may be under-reported in official statistics, and concomitantly that
estimates of average female earnings may be biased upwards. This study relies on the readily-available
traditionally-measured labour market outcomes, while acknowledging the aforementioned limitations.
4
The average OECD score is 494.
5
As we will show later in the report what is unexpected is that labour force participation is not increasing even
though fertility rates are decreasing and age of first marriage is increasing.
6
They use data from the 2002 Indonesian National Socio-Economic Survey (Susenas 2002).
7
By 2006 42.4% of women aged over 15 years were employed, compared to 79.2% for men. Source: World Bank
Indicators calculated using data from the Indonesian National Labour Force Survey (Sakernas),
8
World Development Indicators in 2014
9
Underemployment is defined for these calculations as working less than 35 hours per week and severe
underemployment as working less than 15 hours.
10
Informal sector growth has remained stable at 0.4% growth, except in the period following the crisis (1997-
2000) when it grew around 6.9%, absorbing a larger proportion of new entrants into the labour market and
those who had lost formal sector jobs (Alisjahbana & Manning, 2006; Chowdhury et al., 2009).
11
Calculating the informal sector share from official data sources is not straight forward as no clear definition of
informality exists. The calculations presented here are based on a definition of the informal sector consisting of
workers who are self-employed, self-employed with temporary or unpaid workers, casual or freelance, and
family or unpaid workers. This leaves the formal sector consisting of employees and the self-employed who have
regular paid workers.
12
76.8% (67.3%) for women versus 67.1% (60.3%) for men in 1990 (2006). These figures are from Chowdhury et
al., 2009 who define informality as own-account workers and contributing family workers. Their calculations
used the Sakernas data.
In the period following the crisis male informality was higher than female informality (66.5% versus 61.6%).
During this period the female labour force increased to compensate for the effects of the crisis on household
income. Women were more willing to get paid lower wages than men and so were able to hold on to formal
sector jobs (Pirmana, 2006; Siegmann, 2007). After the effects of the crisis were overcome the trends shifted
back to previous levels (Chowdhury et al., 2009).
13
Siegmann (2007) examines the role of foreign direct investment and finds that it decreases female
employment relative to males in manufacturing and the hotel sector, but increases it in the agricultural sector.
This is because FDI increases the demand for labour which puts upwards pressure on wages across the economy.
This encourages women to enter the labour market, however as women have family commitments and relatively
low reservation wages, they remain concentrated in low wage sectors. The increased demand for labour in the
manufacturing sector associated with FDI thus is mostly supplied by men.
14
Data source: BPS (2010) and Van Klaveren et al. (2010).
15
The female share of total earned income is much lower than this, calculated as around 30% from the 2002
Susenas data (ADB, 2006). This reflects that women are less likely to be working than men and work fewer hours
on average.

80


16
The unexplained component captures the impact of unobserved factors, measurement error, model
misspecification and discrimination.
17
In particular after the Asian financial crisis in 1997.
18
The wage variable used is the natural logarithm of the hourly wage. They control for experience, years of
education, household characteristics, industry and region.
19
The estimates appear (as it is not specified in the paper) to represent an average wage gap over the four years
under analysis. Survey year is included as a dummy variable.
20
The wage variable they use is monthly real workers wage and the information source is Sakernas 2010.
21
The only other study of which we are aware that decomposes the gender wage gap is Siegmann (2003) which
uses the 2001 Susenas. She finds a raw wage gap of 43% (similar to Pirmana, 2006) and that the discrimination
component accounts for 91% of the wage differential. This estimate is not included in Figure 14 as it is very
different from the results obtained by other authors. The difference may be explained by the use of the different
data source and different control variables (the focus of this study is the effect of foreign direct investment on
the wage gap). Human capital characteristics, sectoral variables and foreign direct investment (FDI) intensity by
province are found to only explains about 9% of the total difference. ILO (2012) reports findings from a
decomposition (although not the decomposition results themselves). They calculate a gender wage gap of 26%
in 2012 and find that observable characteristics explain only 41% of the gap.
22
They estimate the difference in monthly wage income controlling for potential experience, number of hours
at work, occupation, status, region, educational attainment and sector.
23
Weichselbaumer and Winter-Ebmer (2005) in a meta data analysis of studies that examine the determinants
of gender wage discrimination find that restricting the analysis to a certain sub-sample of the population (e.g.
formal sector workers) limits comparability with other studies as comparability to the whole population is low.
Similarly, missing or inaccurate information on human capital characteristics (e.g. work experience) can seriously
bias the calculations of the discrimination component. In contrast the choice of econometric method for the
decomposition or the measure of wages (hourly or monthly) is less important.
24
From around 10,000 female migrants to Saudi Arabia in 1980, the number increased to 380,000 in 1998 (Silvey,
2004).
25
For example, some employers retain passports and other travel documents, restrict communication with
family back home, expect very long working hours beyond the terms of the contract and do not allow days off.
The Saudi Arabia moratorium and moratoria in other countries reflects the government of Indonesia’s concern
over the high levels of abuse.
26
To date, virtually no work has been done on the sociological, economic, and psychological impacts of overseas
migration on the families that are left behind (AusAid, 2012). In fact there is still not much information on the
conditions of international workers. The World Bank has started a project to fill the gap in policy-relevant
evidence on international migration and remittances. This work however does not have a gender focus.
27
This study relies on a small sample of field interviews.
28
BRI’s 2003 MASS Survey and Bank Indonesia SME Survey 2005.
29
This is constant across different levels of education, except for tertiary education where only 46% of women
and 55% of the men were not interested.
30
The Indonesian Urban Transport Knowledge Portal provides links to several international and Indonesian
studies. See http://transkot.com/themepage.php&themepgid=354.
31
Some examples of case studies in other countries are: (ADB, 2013; Aljounaidi, 2010; Levy, 2013; Tran &
Schlyter, 2010)). These studies describe how transport infrastructure and services are facilitating or constraining
women’s access to resources, markets, training, information, and employment and underline the importance of
identifying priority areas for public intervention to improve women’s mobility and enhance their access to
economic opportunities.
32
Source: World Bank Indicators 2013. Using the DHS data the rate was 359 per 100,000 live births in 2012
(Indonesia, 2013).
33
Using SUSENAS information. Using the DHS, the rate is 73%.
34
This is an abbreviated summary of our approach and findings. For a more detailed account of the research
see Lisa Cameron, Contreras-Suarez, and Rowel (2015).
35
We use 49 age dummies covering from 15 to 64 years of age (the omitted category is 15 years of age) and 49

cohort dummies – one for each year of birth from 1943 to 1992 (the omitted category is someone born in 1943).
See Euwals, Knoef, and Van Vuuren (2011) for a similar approach in the context of the Netherlands.
36
Refer to section 3.2.

81


37
To calculate a national FLFP we estimate the model over both urban and rural samples, including a control
for urban areas. Results are presented in appendix 2.
38
We compared our projected figures for the percentage of population by age group against UN forecasts.
They are broadly similar, particularly for women aged over 40 years who constitute the majority of working
women.
39
Note that both of the predictions indicate an increase over the official BPS FLFP estimate for 2015. The BPS
uses Sakernas information to calculate FLFP. Remember we are using Susenas information for this analysis. A
sensitivity analysis examining differences between the two surveys can be found in Lisa Cameron and Contreras-
Suarez (2015) and Table A4-4 in appendix 4.
40
This is a summary of the research results. For further detail see Lisa Cameron and Contreras-Suarez (2015).
41
The unexplained component is an estimate of the extent of discrimination in the labour market but it also
captures the effects of unobserved characteristics. Fortin, Lemieux, and Firpo (2011) provide a review of
different decomposition methods.
42
2011 is also the first year that the Susenas provides information on earnings in informal jobs.
43
The proxy for years of potential labour market experience is calculated as a function of age, years of education
and number of children born ( !"#$% '( ")*"$+",-". = 01". − !"#$% '( "34-#5+',. −
# '( -ℎ+83$", 9'$,. − 5 ). We discount experience by one year for each child born. This approach likely
understates the impact of childbearing and childrearing on experience for women.
44
Percentages in the tables represent the proportion of the contribution of a specific characteristic to the raw
wage gap.
45
Glass ceilings and sticky floors are two different patterns identified in the literature of wage gaps. If women
at the top of the wage distribution experience a higher wage gap, this is referred to as evidence of a glass ceiling.
In contrast, if women at the bottom of the distribution experience a higher wage gap, it is referred as a sticky
floor. Sticky floors have been found in many developing countries. For example, Chi and Li (2008) find evidence
of sticky floors in urban jobs in China where women production workers with relatively low education working
in non-state owned enterprises were found to be particularly lowly paid relative to equivalent men. Similarly
Ahmed and Maitra (forthcoming) and Ahmed and McGillivray (2015) find that low earning females in full-time
jobs face greater discrimination than females in higher earning jobs in Bangladesh.
46
Note that unlike in Section 3. In a cross-sectional analysis we cannot separately identify the effects of age and
cohort so the results reported here are just suggestive of changes over time.
47
All the quantitative results are presented in Appendix 5.
48
We use the Susenas data (the National Socio-economic Survey). Section A4-5 in this appendix examines
differences in unemployment rates calculated using the Susenas and Sakernas (National Labour Force Survey).
49
Table A4-6 shows the results for each of the survey years.
50
Taken from the BPS website. Accessed on 15 April 2016.
51
For example, collecting capital, preparing equipment, looking for a business location, applying for business
permits. This does not include persons who just have plans to do so, or who are attending a course/training to
prepare a business/firm.

82
Women’s Economic Participation in Indonesia
A study of gender inequality in employment, entrepreneurship, and key
enablers for change
Australia Indonesia Partnership

for Economic Governance

Women's Economic Participation in Indonesia

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Australia Indonesia Partnership

for Economic Governance

Women’s Economic Participation in Indonesia

In another area of economic participation, entrepreneurship, women tend to be under-represented.

List of Figures, Tables and Equations

2.1.1 Education attendance and completion

Table 1 Enrolment status by gender for individuals aged 5 to 18 years

Source: Susenas 2013.

Source: Susenas 2013.

Figure 4 Indonesia PISA 2012 test results by gender

2.2 Labour Market

Figure 5 Total Employment in Agriculture

Figure 6 Female Labour Force Participation by Country

Source: World Bank, 2013.

Figure 8 Female Unemployment

Figure 9 Underemployment by gender and Urban/Rural

2.2.2 Employment Status (Formal/Informal)

Figure 11 Informal Status of Employment by Region in 2013

2.2.3 Industrial and Occupational Segregation

Figure 12 Employment by Industry

2.2.4 Working conditions

Figure 13 Workers Wage Female/Male Ratio

Figure 14 Blinder-Oaxaca Decomposition

2.3 Finance & Entrepreneurship

Women’s underrepresentation as entrepreneurs in Indonesia is attributed to various factors.

Total Owner is a male Owner is a female

Source: World Bank (2010b).

Table 5 Delivery attendance

2007 2011 2013

(2.0) (1.9) (1.8)

2.6 Institutions & Laws

2.6.1 Law in relation to families

Figure 16 Female’s age at their first marriage, 2013

2.6.2 Labour Laws

2.6.3 Property Rights

2.6.4 Political Representation

3. Stagnation of the female labour force participation in Indonesia:

3.2 Data and Methods

Equation 1 Labour force participation

Table 7 Summary statistics of labour force participation and explanatory variables

Figure 18 Age and cohort effects

Age effect Cohort effect

Female Male Females Males

3.5 Female Labour Force Participation Projection

3.5.1 Model Performance

Figure 19 Observed and model predicted Female Labour Force Participation

Female Predicted Female Observed

3.5.2 Prediction of determinant variables

Equation 2 Trend prediction of determinants of FLFP

'" = )* + )& , + -"

Table 9 FLFP determinats annual growth in percentage points

VARIABLES Time trend

3.5.2 Female Labour Force Participation Projection

4.2 Data and Method

Figure 21 Logarithm of the Hourly wages of male and female workers

Density Density Density Density

Equation 3 Wage equation

Table 11 OLS estimates of Wage by gender and sector of employment

Figure 23 Gender wage gap decomposition at the mean by sector of employment

4.3.1 Decomposition across the Wage Distribution

The areas we propose for future research are:

Potential Contributing Factors: