Presenter:NI, Bin （Research Associate, WIAPS）
Presentation Theme:Minimum wage, export and firm performance: Evidence from Indonesia
This paper examines the inter-relationship between changes in the provincial minimum wage, firms’ export behavior and their performance in Indonesia using detailed firm-level data of manufacturing enterprises between 2002 and 2014. We find that an increase in the minimum wage is associated with a decrease in a firm’s employment rate, the probability of exporting and overall performance, in terms of productivity and markup. We also use the 2012 minimum wage reform in Indonesia to conduct a difference-in-difference analysis to mitigate the potential endogeneity of this regulation. These findings are generally robust to alternative estimation methods. The results thus suggest that Indonesian exports and comparative advantage in international markets are not negligibly affected by higher labor costs through minimum wage increase.