Does Minimum Wage Policy Help Poor Workers? Evidence from Indonesia
Does Minimum Wage Policy Help Poor Workers? Evidence from Indonesia

Summary/Abstract: The objective of this study is to examine the effects of minimum wage policy on poverty of workers in Indonesia. Using National Labour Force Survey (Sakernas) data of 2011-13, specifically, this study examines how the minimum wage policy affects the probability of worker categorized as poor or non- poor. The finding shows that an increase in the minimum wage generally decreases the probability of workers being categorized as poor. Nevertheless, the significant impact is found specifically on workers living in urban areas only, suggesting that the minimum wage policy is not an effective instrument to improve the standards of living of workers living in the rural areas.

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