Employed Yet Still Poor: A Microdata Analysis of Working Poverty in Indonesia
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Abstract
This study aims to quantify the extent of working poverty in Indonesia and identify the demographic, geographic, and occupational factors associated with it, using microdata from the Survei Sosial Ekonomi Nasional (SUSENAS) 2022. The analysis employs logistic regression to determine the key determinants of working poverty among Indonesian laborers. The results reveal that older individuals, males, those with bank accounts, and those who use telephones and the internet are less likely to be in working poverty. These findings highlight the importance of age-related experience, gender-related economic advantages, financial inclusion, and digital connectivity in mitigating working poverty. Notably, education and formal sector employment did not show significant effects, suggesting that other factors may mediate their relationship with working poverty. The results emphasize the need for policies promoting financial and digital inclusion as part of poverty alleviation strategies. Enhancing access to banking services, telecommunication, and the internet, along with addressing gender disparities in the labor market, is crucial. Further exploration into the quality and market relevance of education is also recommended to design effective interventions tailored to the diverse needs of the working poor.
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Aguliera, E., & Nightengale-Lee, B. (2020). Emergency remote teaching across urban and rural contexts: perspectives on educational equity. Information and Learning Sciences, 121(5/6), 471-478.
Agwu, M. E. (2021). Can technology bridge the gap between rural development and financial inclusions?. Technology Analysis & Strategic Management, 33(2), 123-133.
Akbar, F. (2022). Gender Wage Gap: Evidence from Employment in Informal Sector. The Journal of Indonesia Sustainable Development Planning, 3(2), 104-117.
Aparicio, S., Audretsch, D., Noguera, M., & Urbano, D. (2022). Can female entrepreneurs boost social mobility in developing countries? An institutional analysis. Technological Forecasting and Social Change, 175, 121401.
Balboni, C., Bandiera, O., Burgess, R., Ghatak, M., & Heil, A. (2022). Why do people stay poor?. The Quarterly Journal of Economics, 137(2), 785-844.
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Chankseliani, M., Qoraboyev, I., & Gimranova, D. (2021). Higher education contributing to local, national, and global development: new empirical and conceptual insights. Higher Education, 81(1), 109-127.
Cuesta, J., & Pico, J. (2020). The gendered poverty effects of the COVID-19 pandemic in Colombia. The European journal of development research, 32(5), 1558.
Dartanto, T., Halimatussadiah, A., Rezki, J. F., Nurhasana, R., Siregar, C. H., Bintara, H., ... & Soeharno, R. (2020). Why do informal sector workers not pay the premium regularly? Evidence from the National Health Insurance System in Indonesia. Applied health economics and health policy, 18, 81-96.
Doeringer, P. B., & Piore, M. J. (1971). Internal labor markets and manpower analysis. Heath Lexington Books.
Dorfleitner, G., & Nguyen, Q. A. (2024). Mobile money for women’s economic empowerment: The mediating role of financial management practices. Review of Managerial Science, 18(7), 1807-1836.
Dougherty, S. M., & Ecton, W. G. (2021). The economic effect of vocational education on student outcomes. In Oxford research encyclopedia of economics and finance.
Endrawati, D. (2022). Determinants of working poverty in Indonesia. Journal of Economics and Development, 24(3), 230-246.
Etim, E., & Daramola, O. (2020). The informal sector and economic growth of South Africa and Nigeria: A comparative systematic review. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), 134.
Fahad, S., Nguyen-Thi-Lan, H., Nguyen-Manh, D., Tran-Duc, H., & To-The, N. (2023). Analyzing the status of multidimensional poverty of rural households by using sustainable livelihood framework: policy implications for economic growth. Environmental Science and Pollution Research, 30(6), 16106-16119.
Feder, J., & Yu, D. (2020). Employed yet poor: low-wage employment and working poverty in South Africa. Development Southern Africa, 37(3), 363-381.
Hammer, A., & Ness, I. (2021). Informal and precarious work: Insights from the global south. Journal of Labor and Society, 24(1), 1-15.
Han, J. S., & Lee, J. W. (2020). Demographic change, human capital, and economic growth in Korea. Japan and the World Economy, 53, 100984.
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Jelks, S. M., & Crain, A. M. (2020). Sticking with STEM: Understanding STEM career persistence among STEM bachelor’s degree holders. The Journal of Higher Education, 91(5), 805-831.
Kabeer, N. (2021). Gender equality, inclusive growth, and labour markets. In Women's Economic Empowerment (pp. 13-48). Routledge.
Khanna, A. (2020). Impact of migration of labour force due to global COVID-19 pandemic with reference to India. Journal of Health management, 22(2), 181-191.
Khussainova, Z. S., Yeskendir, N. N., K?rchevskaya, L. A., & Gordeyeva, Y. A. (2023). “The working poor” phenomenon: notion, regional characteristics. Bulletin of the Karaganda university Economy series, 110(2), 44-52.
Lauder, H., & Mayhew, K. (2020). Higher education and the labour market: an introduction. Oxford Review of Education, 46(1), 1-9.
Le, N. P., & Chung, D. K. (2020). Education, employment, and income: an overview of rural-urban gaps in Vietnam. https://www.cabidigitallibrary.org/doi/full/10.5555/20219966876
Leyva, G., & Urrutia, C. (2020). Informality, labor regulation, and the business cycle. Journal of International Economics, 126, 103340.
Ng, I. Y., Tan, Z. H., & Chung, G. (2024). Time Poverty among the Young Working Poor: A Pathway from Low Wage to Psychological Well-being through Work-to-Family-Conflict. Journal of Family and Economic Issues, 1-15.
Nguimkeu, P., & Okou, C. (2021). Leveraging digital technologies to boost productivity in the informal sector in Sub?Saharan Africa. Review of Policy Research, 38(6), 707-731.
Olu-Owolabi, F. E., Amoo, E., Samuel, O., Oyeyemi, A., & Adejumo, G. (2020). Female-dominated informal labour sector and family (in) stability: The interface between reproduction and production. Cogent arts & humanities, 7(1), 1788878.
Othman, A. (2018). Does multifaceted poverty approach enhance the identification of the poor and needy in zakat institutions. International Journal of Academic Research in Business and Social Sciences, 8(11), 779-790.
Özgür, G., Elgin, C., & Elveren, A. Y. (2021). Is informality a barrier to sustainable development?. Sustainable Development, 29(1), 45-65.
Purwono, R., Wardana, W. W., Haryanto, T., & Mubin, M. K. (2021). Poverty dynamics in Indonesia: empirical evidence from three main approaches. World Development Perspectives, 23, 100346.
Riisgaard, L., Mitullah, W. V., & Torm, N. (2022). Social protection and informal workers in sub-Saharan Africa: Lived realities and associational experiences from Tanzania and Kenya (p. 274). Taylor & Francis.
Rodriguez-Loureiro, L., Vives, A., Martínez Franzoni, J., & Lopez-Ruiz, M. (2020). Health inequalities related to informal employment: gender and welfare state variations in the Central American region. Critical Public Health, 30(3), 306-318.
Rossier, J., & Ouedraogo, A. (2024). Work volition, decent work, and work fulfilment, in the formal and informal economy in Burkina Faso. In Decent Work, Inclusion and Sustainability (pp. 129-145). Routledge.
Salignac, F., Hanoteau, J., & Ramia, I. (2022). Financial resilience: a way forward towards economic development in developing countries. Social Indicators Research, 1-33.
Shrider, E. A., Kollar, M., Chen, F., & Semega, J. (2021). Income and poverty in the United States: 2020. https://cps.ipums.org/cps/resources/poverty/PovReport20.pdf
Soseco, T., Hidayah, I., & Rini, A. D. (2022). Gender determinant on multidimensional poverty index. Evidence from Indonesia. In 26 (pp. 137-151).
Sugiharti, L., Purwono, R., Esquivias, M. A., & Jayanti, A. D. (2022). Poverty Dynamics in Indonesia: The Prevalence and Causes of Chronic Poverty. Journal of Population & Social Studies, 30.
United Nations. (2015). Transforming our world: the 2030 Agenda for Sustainable Development. Retrieved from https://sustainabledevelopment.un.org/post2015/transformingourworld
United Nations. (2023). Progress towards the Sustainable Development Goals: Report of the Secretary-General. Retrieved from https://unstats.un.org/sdgs/report/2023
Wagle, U. R. (2017). How much do social protections matter to poverty and inequality? An insight from Asian experiences. Global social policy, 17(2), 137-167.
Whillans, A., & West, C. (2022). Alleviating time poverty among the working poor: a pre-registered longitudinal field experiment. Scientific Reports, 12(1), 719.
Adhikari, D. B. (2020). Informal economy and poverty dynamics: A review. Sharma, B., & Adhikari, D.(2020). Informal Economy and Poverty Dynamics: A Review. Quest Journal of Management and Social Sciences, 2(1), 168-180.
Aguliera, E., & Nightengale-Lee, B. (2020). Emergency remote teaching across urban and rural contexts: perspectives on educational equity. Information and Learning Sciences, 121(5/6), 471-478.
Agwu, M. E. (2021). Can technology bridge the gap between rural development and financial inclusions?. Technology Analysis & Strategic Management, 33(2), 123-133.
Akbar, F. (2022). Gender Wage Gap: Evidence from Employment in Informal Sector. The Journal of Indonesia Sustainable Development Planning, 3(2), 104-117.
Aparicio, S., Audretsch, D., Noguera, M., & Urbano, D. (2022). Can female entrepreneurs boost social mobility in developing countries? An institutional analysis. Technological Forecasting and Social Change, 175, 121401.
Balboni, C., Bandiera, O., Burgess, R., Ghatak, M., & Heil, A. (2022). Why do people stay poor?. The Quarterly Journal of Economics, 137(2), 785-844.
Becker, G. S. (1964). Human capital: A theoretical and empirical analysis, with special reference to education. University of Chicago Press.
Benavides, F. G., Silva-Peñaherrera, M., & Vives, A. (2022). Informal employment, precariousness, and decent work: from research to preventive action. Scandinavian journal of work, environment & health, 48(3), 169.
BPS – Statistics Indonesia. (2023). Data dan Informasi Kemiskinan Kabupaten/Kota Tahun 2023. Badan Pusat Statistik: Jakarta
Brown, P., & James, D. (2020). Educational expansion, poverty reduction and social mobility: Reframing the debate. International Journal of Educational Research, 100, 101537.
Cattaneo, A., Adukia, A., Brown, D. L., Christiaensen, L., Evans, D. K., Haakenstad, A., ... & Weiss, D. J. (2022). Economic and social development along the urban–rural continuum: New opportunities to inform policy. World Development, 157, 105941.
Chankseliani, M., Qoraboyev, I., & Gimranova, D. (2021). Higher education contributing to local, national, and global development: new empirical and conceptual insights. Higher Education, 81(1), 109-127.
Cuesta, J., & Pico, J. (2020). The gendered poverty effects of the COVID-19 pandemic in Colombia. The European journal of development research, 32(5), 1558.
Dartanto, T., Halimatussadiah, A., Rezki, J. F., Nurhasana, R., Siregar, C. H., Bintara, H., ... & Soeharno, R. (2020). Why do informal sector workers not pay the premium regularly? Evidence from the National Health Insurance System in Indonesia. Applied health economics and health policy, 18, 81-96.
Doeringer, P. B., & Piore, M. J. (1971). Internal labor markets and manpower analysis. Heath Lexington Books.
Dorfleitner, G., & Nguyen, Q. A. (2024). Mobile money for women’s economic empowerment: The mediating role of financial management practices. Review of Managerial Science, 18(7), 1807-1836.
Dougherty, S. M., & Ecton, W. G. (2021). The economic effect of vocational education on student outcomes. In Oxford research encyclopedia of economics and finance.
Endrawati, D. (2022). Determinants of working poverty in Indonesia. Journal of Economics and Development, 24(3), 230-246.
Etim, E., & Daramola, O. (2020). The informal sector and economic growth of South Africa and Nigeria: A comparative systematic review. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), 134.
Fahad, S., Nguyen-Thi-Lan, H., Nguyen-Manh, D., Tran-Duc, H., & To-The, N. (2023). Analyzing the status of multidimensional poverty of rural households by using sustainable livelihood framework: policy implications for economic growth. Environmental Science and Pollution Research, 30(6), 16106-16119.
Feder, J., & Yu, D. (2020). Employed yet poor: low-wage employment and working poverty in South Africa. Development Southern Africa, 37(3), 363-381.
Hammer, A., & Ness, I. (2021). Informal and precarious work: Insights from the global south. Journal of Labor and Society, 24(1), 1-15.
Han, J. S., & Lee, J. W. (2020). Demographic change, human capital, and economic growth in Korea. Japan and the World Economy, 53, 100984.
Indrawati, S. M., & Kuncoro, A. (2021). Improving competitiveness through vocational and higher education: Indonesia’s vision for human capital development in 2019–2024. Bulletin of Indonesian Economic Studies, 57(1), 29-59.
International Labour Organization (ILO). (2018). World Employment and Social Outlook 2018: Greening with jobs. Geneva: International Labour Office.
International Labour Organization (ILO). (2022). Indonesia: Working poverty and labor market characteristics. Retrieved from https://www.ilo.org/global/topics/working-poverty/WCMS_752689/lang--en/index.htm
Jelks, S. M., & Crain, A. M. (2020). Sticking with STEM: Understanding STEM career persistence among STEM bachelor’s degree holders. The Journal of Higher Education, 91(5), 805-831.
Kabeer, N. (2021). Gender equality, inclusive growth, and labour markets. In Women's Economic Empowerment (pp. 13-48). Routledge.
Khanna, A. (2020). Impact of migration of labour force due to global COVID-19 pandemic with reference to India. Journal of Health management, 22(2), 181-191.
Khussainova, Z. S., Yeskendir, N. N., K?rchevskaya, L. A., & Gordeyeva, Y. A. (2023). “The working poor” phenomenon: notion, regional characteristics. Bulletin of the Karaganda university Economy series, 110(2), 44-52.
Lauder, H., & Mayhew, K. (2020). Higher education and the labour market: an introduction. Oxford Review of Education, 46(1), 1-9.
Le, N. P., & Chung, D. K. (2020). Education, employment, and income: an overview of rural-urban gaps in Vietnam. https://www.cabidigitallibrary.org/doi/full/10.5555/20219966876
Leyva, G., & Urrutia, C. (2020). Informality, labor regulation, and the business cycle. Journal of International Economics, 126, 103340.
Ng, I. Y., Tan, Z. H., & Chung, G. (2024). Time Poverty among the Young Working Poor: A Pathway from Low Wage to Psychological Well-being through Work-to-Family-Conflict. Journal of Family and Economic Issues, 1-15.
Nguimkeu, P., & Okou, C. (2021). Leveraging digital technologies to boost productivity in the informal sector in Sub?Saharan Africa. Review of Policy Research, 38(6), 707-731.
Olu-Owolabi, F. E., Amoo, E., Samuel, O., Oyeyemi, A., & Adejumo, G. (2020). Female-dominated informal labour sector and family (in) stability: The interface between reproduction and production. Cogent arts & humanities, 7(1), 1788878.
Othman, A. (2018). Does multifaceted poverty approach enhance the identification of the poor and needy in zakat institutions. International Journal of Academic Research in Business and Social Sciences, 8(11), 779-790.
Özgür, G., Elgin, C., & Elveren, A. Y. (2021). Is informality a barrier to sustainable development?. Sustainable Development, 29(1), 45-65.
Purwono, R., Wardana, W. W., Haryanto, T., & Mubin, M. K. (2021). Poverty dynamics in Indonesia: empirical evidence from three main approaches. World Development Perspectives, 23, 100346.
Riisgaard, L., Mitullah, W. V., & Torm, N. (2022). Social protection and informal workers in sub-Saharan Africa: Lived realities and associational experiences from Tanzania and Kenya (p. 274). Taylor & Francis.
Rodriguez-Loureiro, L., Vives, A., Martínez Franzoni, J., & Lopez-Ruiz, M. (2020). Health inequalities related to informal employment: gender and welfare state variations in the Central American region. Critical Public Health, 30(3), 306-318.
Rossier, J., & Ouedraogo, A. (2024). Work volition, decent work, and work fulfilment, in the formal and informal economy in Burkina Faso. In Decent Work, Inclusion and Sustainability (pp. 129-145). Routledge.
Salignac, F., Hanoteau, J., & Ramia, I. (2022). Financial resilience: a way forward towards economic development in developing countries. Social Indicators Research, 1-33.
Shrider, E. A., Kollar, M., Chen, F., & Semega, J. (2021). Income and poverty in the United States: 2020. https://cps.ipums.org/cps/resources/poverty/PovReport20.pdf
Soseco, T., Hidayah, I., & Rini, A. D. (2022). Gender determinant on multidimensional poverty index. Evidence from Indonesia. In 26 (pp. 137-151).
Sugiharti, L., Purwono, R., Esquivias, M. A., & Jayanti, A. D. (2022). Poverty Dynamics in Indonesia: The Prevalence and Causes of Chronic Poverty. Journal of Population & Social Studies, 30.
United Nations. (2015). Transforming our world: the 2030 Agenda for Sustainable Development. Retrieved from https://sustainabledevelopment.un.org/post2015/transformingourworld
United Nations. (2023). Progress towards the Sustainable Development Goals: Report of the Secretary-General. Retrieved from https://unstats.un.org/sdgs/report/2023
Wagle, U. R. (2017). How much do social protections matter to poverty and inequality? An insight from Asian experiences. Global social policy, 17(2), 137-167.
Whillans, A., & West, C. (2022). Alleviating time poverty among the working poor: a pre-registered longitudinal field experiment. Scientific Reports, 12(1), 719.
Authors
Setyanti, A. M., Syafitri, W., Finuliyah, F. and Khoiruddin, M. A. (2024) “Employed Yet Still Poor: A Microdata Analysis of Working Poverty in Indonesia”, Jurnal Ketenagakerjaan, 19(3), pp. 281–294. doi: 10.47198/jnaker.v19i3.403.
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