ELASTISITAS PENAWARAN TENAGA KERJA INTENSIVE MARGIN DI INDONESIA

Abstract

This research provided the intensive margin elasticity of labor supply theory, thatwas to find out the change in hours of work in response to a wage change. Thisresearch was also to find out the influence of labor wage change to an hours ofwork change based on age, education and the region in Indonesia. The data forcollecting was secondary data from Bureau of Statistic in year 1997-2008, thatconsist of hours of work rate and the wage rate based on age, education and theregion in Indonesia. The analysis method used in this research was a model ofconstant elasticity using SPSS program. The intensive margin elasticity of laborsupply based on age was 0.019, 0.038 and 0.045, education was 0.039, 0.042 and0.020 mean while based on the region was 0.022, 0.047 and 0.037. Then the totalof the intensive margin elasticity of labor supply was 0.033. The variable ofresponse in wage change was positive and significant to the change in hours ofwork. The result from the estimate of the intensive margin elasticity of laborsupply in Indonesia was inelastic, it means that the increasing of hours of workwas not sensitive to the increasing of labor wage. The positive correlation in eachelasticity coefficient showed that the substitution effect was bigger than theincome effect, it means that the increase in wage influenced the increase inlabors’s hours of work.