Causality Analysis Real Wages and Opportunities in Indonesia with a Dynamic Model Approach

Murtala, Teuku Putra, Chalirafi, Eddy Gunawan, Irham Iskandar

2019

Abstract

Wages are one of the deciding indicators in employment opportunities, wage improvements in the economic development process are absolutely necessary. With an increase in wages, it means an increase in income, an increase in purchasing power and an increase in people's welfare. Increased income of the community will have an impact on increasing demand for goods and services, then in turn at a macro level will encourage companies to develop. This study aims to determine the effect of real wages on employment opportunities in Indonesia by using the Vector Auto Regression (VAR) approach. The data used in this study are time series data during the 1980-2015 period. The analytical method used in this study is the Vector Auto Regression (VAR) model. Estimation results show that employment opportunities and stationary real wages are at different rates using Philips-Perron. The results of the analysis did not occur co-integration in the long run. Real wages have a negative effect on employment opportunities in Indonesia. This condition illustrates that during the study period the increase in real wages that occurred in Indonesia was not followed by a balanced increase in productivity, so that an increase in real wages led to a reduction in demand for labor.

Paper Citation

in Harvard Style

Murtala., Putra T., Chalirafi., Gunawan E. and Iskandar I. (2019). Causality Analysis Real Wages and Opportunities in Indonesia with a Dynamic Model Approach. In Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting - Volume 1: MIICEMA, ISBN 978-989-758-582-1, pages 190-199. DOI: 10.5220/0009847600002900

in Bibtex Style

@conference{miicema19,
author={Murtala and Teuku Putra and Chalirafi and Eddy Gunawan and Irham Iskandar},
title={Causality Analysis Real Wages and Opportunities in Indonesia with a Dynamic Model Approach},
booktitle={Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting - Volume 1: MIICEMA,},
year={2019},
pages={190-199},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0009847600002900},
isbn={978-989-758-582-1},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting - Volume 1: MIICEMA,
TI - Causality Analysis Real Wages and Opportunities in Indonesia with a Dynamic Model Approach
SN - 978-989-758-582-1
AU - Murtala.
AU - Putra T.
AU - Chalirafi.
AU - Gunawan E.
AU - Iskandar I.
PY - 2019
SP - 190
EP - 199
DO - 10.5220/0009847600002900