Working Paper DAMPAK UPAH TERHADAP PRODUKTIVITAS DAN INFLASI: STUDI SEKTORAL DAN REGIONAL

Abstract In this paper we observe three key issues. First, we measure the effectiveness of regional minimum wage in affecting actual wage determination, productivity, and inflation level in Indonesia. Furthermore, we expand our analysis on significant factors affecting wage determination, productivity, and inflation level as our second objective. Finally, we identify the existence of a threshold level of minimum wage in relation to inflation level. For the abovementioned purposes, we apply spatial lag model (SAR) and spatial error model (SEM) to address the first and the second issue to provincial level data of Indonesia during of 2000-2006. Hence, following Hansen (1999) and Caner and Hansen (2004), we apply dynamic panel threshold model to extract the threshold level, given endogeneity issue. Correspondingly, it is evident that there is a nonlinear relationship between wage and inflation in Indonesia and we suggest that any minimum wage increase above 12.7 % will significantly accelerate inflation rate and under which an insignificant relationship exist. Furthermore, we show that actual wage determination in manufacturing and trade sector rely mainly on minimum wage, inflation, and GDP growth while the increase of workers productivity is a product of education and training. Therefore, we suggest that an integrated social policy is a key to boost workers welfare. Keywords: minimum wages rate, inflation rate,spatial lag model (SAR), spatial error model (SEM), dynamic panel threshold model. JEL CLASSIFICATION: E 24, E 31 2

2011 2012 2013 NO. PROPINSI U Growth Growth Growth M 1 D.I. Aceh 3.85 3.70 10.71 2 Sumatera Utara 7.31 15.89 8.75 3 Sumatera Barat 12.23 9.00 17.39 4 Riau 10.24 10.54 13.09 5 Kepulauan Riau 5.41 4.10 34.49 6 Jambi 14.22 11.24 13.69 7 Sumatera Selatan 13.00 14.00 30.00 8 Bangka Belitung 12.53 8.40 13.96 9 Bengkulu 4.49 14.11 29.03 10 Lampung 11.40 14.04 11 Jawa Barat 9.01 44.53 27.00 14 DKI Jakarta 15.38 18.54 43.87 15 Banten 4.68 4.20 12 Jawa Tengah 2.27 23.86 9.00 16 D.I. Yogyakarta 8.36 10.48 10.76 13 Jawa Timur 11.90 32.49 12.23 17 Bali 7.32 8.71 24.03 23 N T B 6.65 5.26 22 N T T 6.25 14.71 3.59 18 Kalimantan Barat 8.30 12.15 17.78 21 Kalimantan Selatan 9.91 8.79 9.18 19 Kalimantan Tengah 15.01 17.00 17.00 20 Kalimantan Timur 8.18 8.58 48.85 24 Maluku 7.14 8.33 25 Maluku Utara 5.00 8.00 26 Gorontalo 7.39 9.84 27 Sulawesi Utara 5.00 19.05 30 Sulawesi Tenggara 8.14 11.00 9.00 29 Sulawesi Tengah 6.43 6.95 28 Sulawesi Selatan 10.00 9.09 20.00 31 Sulawesi Barat 6.55 12.03 32 Irian Jaya 6.57 7.89 33 Irian Jaya Barat 16.53 2.84 UMP Rata-rata 8.69 12.54 19.75 Growth UMP Rata-rata biasa 8.80 11.93 21.66 Growth UMP Rata-rata tertimbang 10.50 19.79 29.68 Inflasi 3.79 4.50 4.50 4

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y X... (2) W... (3) W μ 11

W ij t ij, t it it it ij, t. M. W W min Y P (11) ρ 12

P ij t ij, t it it it ij, t ro, M. Pro W SC TR (12) P it it it it it i, t M. P W Loan Y (13) ρ Produktivitas i,t = α + βws i,t + δps i,t + ε i,t (14) 13

Dampak UMP Terhadap Upah Aktual Semua Sektor SAR Variable FE RE FE SEM RE Spatial Autocorrelation Inflasi Upah Minimum Provinsi PDRB 0.0045 0.2270 0.5110 0.2010 0.0530 0.2270 0.5090 0.1890 0.8790 0.2440 0.5240 0.2270 0.8690 0.2450 0.5200 0.2210 (2.96) (16.52) (76.39) (19.95) (3.52) (16.59) (76.41) (19.59) (37.90) (32.73) (139.45) (33.77) (33.51) (33.28) (139.28) (33.59) R-Squared 0.9995 0.9994 0.9995 0.9998 dummy Regional V Observasi Hausman Test (Prob) LM Test Robust LM Test no spatial lag Robust LM Test no spatial error Catatan: Asymtot t-stat dalam tanda kurung,**,* menunjukkan tingkat signifikansi pada level 1%,5% dan 10% 338 19.68 (0.028) 7.64 1.15 15

Dampak UMP Terhadap Upah Aktual Sektor Pertanian SAR SEM Variable FE RE FE RE Spatial Autocorrelation Inflasi (CPI) Upah Minimum Provinsi PDRB 0.0290 0.3120 0.3960 0.2490 0.0300 0.3120 0.3960 0.2480 0.4750 0.3290 0.3920 0.2710 0.8000 0.3330 0.3930 0.2710 (4.88) (61.51) (171.46) (67.65) (5.08) (62.20) (173.39) (68.35) (5.24) (67.88) (201.86) (73.23) (20.73) (100.03) (219.5) (87.57) R-Squared 0.9999 0.9999 0.9999 0.9999 Observasi Hausman Test (Prob) 338 0.328 1.00 LM Test Robust LM Test no spatial lag Robust LM Test no spatial error 6.0250 0.0029 Catatan: Asymtot t-stat dalam tanda kurung,**,* menunjukkan tingkat signifikansi pada level 1%,5% dan 10% 17

Dampak UMP Terhadap Upah Aktual Sektor Industri SAR SEM Variable FE RE FE RE Spatial Autocorrelation Inflasi (CPI) Upah Minimum Provinsi PDRB 0.0200 0.1100 0.7100 0.1500 0.0400 0.0700 0.7100 0.1600 0.8300 0.1100 0.7200 0.1600 0.8700 0.1100 0.7200 0.1600 (1.86) (10.36) (127.82) (18.26) (3.43) (6.98) (119.69) (19.67) (25.45) (13.89) (219.27) (25.69) (33.90) (19.29) (236.76) (29.32) R-Squared 0.9997 0.9996 0.9999 0.9999 dummy Regional Observasi Hausman Test (Prob) LM Test Robust LM Test no spatial lag Robust LM Test no spatial error V 338 83.52 (0.000) 8.00 2.05 Catatan: Asymtot t-stat dalam tanda kurung,**,* menunjukkan tingkat signifikansi pada level 1%,5% dan 10% 19

Dampak UMP Terhadap Upah Aktual Sektor Perdagangan SAR SEM Variable FE RE FE RE Spatial Autocorrelation Inflasi Upah Minimum Provinsi PDRB 0.0390 0.2100 0.5900 0.1200 0.0400 0.2100 0.5900 0.1200 0.7600 0.2200 0.5900 0.1700 0.8800 0.2300 0.5900 0.1700 (5.28) (29.54) (162.63) (23.88) (5.65) (29.61) (162.45) (23.59) (16.47) (39.31) (257.91) (40.05) (37.40) (53.54) (277.54) (45.87) R-Squared 0.9999 0.9998 0.9999 0.9999 dummy Regional dummy Waktu Observasi Hausman Test (Prob) LM Test Robust LM Test no spatial lag Robust LM Test no spatial error V V 338 40.64 (0.000) 6.53 0.29 Catatan: Asymtot t-stat dalam tanda kurung,**,* menunjukkan tingkat signifikansi pada level 1%,5% dan 10% 21

Dampak UMP Terhadap Produktivitas Pekerja SAR SEM Variable FE RE FE RE Spatial Autocorrelation Schooling Training Opennes UMP 0.520 0.007 0.060 0.030 0.0005 0.490 0.006 0.070 0.030 0.0008 0.560 0.004 0.140 0.030 0.0007 0.577 0.005 0.138 0.034 0.0008 ** (6.50) (0.87) (4.04) (3.01) (0.41) (5.82) (0.835) (4.21) (3.17) (0.55) (7.26) (0.51) (6.71) (3.28) (0.48) (6.76) (2.08) (6.62) (3.57) (0.37) R-Squared 0.992 0.991 0.991 0.988 Observasi Hausman Test (Prob) LM Test Robust LM Test no spatial lag Robust LM Test no spatial error Catatan: Asymtot t-stat dalam tanda kurung,**,* menunjukkan tingkat signifikansi pada level 1%,5% dan 10% 338 4.48 (0.87) 4.98 5.69 23

Upah & Produktifitas: Peran Pangsa Pendapatan Pekerja vs Non Pekerja Variable FE RE Labour Income Share Non Labour Income Share Constant 0.0870 25.7700 4.5500 ** 15.8600 4.6000 0.0700 * (1.977) (1.622) (0.16) (1.059) (0.15) (1.707) R-Squared 0.0080 0.0200 Hausman Test 4.820 Chi Squared Prob > Chi Squared 0.080 Catatan: Asymtot t-stat dalam tanda kurung,**,* menunjukkan tingkat signifikansi pada level 1%,5% dan 10% 25

Variable Spatial Autocorrelation Kredit Opennes UMP Nilai Tukar 0.71 0.058-0.018 0.096 0.04 * 0.73 0.02-0.02 0.19 0.03 0.96 0.06-0.02 0.28 0.69 1.00 0.04-0.02 0.24 0.11 (20.42) (5.67) (-3.54) (5.56) (1.42) (23.78) (3.19) (-4.23) (7.13) (0.74) (137.51) (4.22) (-3.85) (7.44) (0.89) (9378.01) (3.04) (-4.33) (6.73) (1.09) R-Squared 0.982 0.990 0.746 0.991 dummy Regional Observasi Hausman Test (Prob) LM Test Robust LM Test no spatial lag Robust LM Test no spatial error Dampak UMP Terhadap Inflasi SAR 278.26 2.34 Catatan: Asymtot t-stat dalam tanda kurung,**,* menunjukkan tingkat signifikansi pada level 1%,5% dan 10% FE RE V 338 35.96 (0.00) FE SEM RE 26

Inflasi (%) UMP (%) 28

β β Nilai threshold UMP terhadap inflasi Inflasi inertia Kredit Nilai Tukar Konstanta R-Squared Observasi Threshold UMP Terhadap Inflasi α 12.73% Pengaruh UMP terhadap inflasi β1 β2 0.0086 (0.0072) 0.031 (11.36) Pengaruh variabel lainnya terhadap inflasi 0.086 (7.714) 0.057 (3.471) 0.124 (5.612) 1.215 (1.017) 0.882 312 Catatan: Asymtot t-stat dalam tanda kurung,**,* menunjukkan tingkat signifikansi pada level 1%,5% dan 10% 30