Estimating the national impact of the financial crisis in Indonesia by combining a rapid qualitative study with nationally representative surveys

Abstract

This paper draws on a rapid qualitative assessment of the impact of the financial crisis in Indonesia, to generate hypotheses about the potential national impacts. We test these hypotheses using nationally representative labour force surveys from before and after the onset of the financial crisis. We find that Indonesia weathered the storm rather well: there is no evidence for increased school dropout; labour force participation fell, particularly for young workers, whilst unemployment rose for the young, but fell for workers over 25. The changes for female workers were the same as those for male workers and there do not appear to have been any major sectoral shifts in labour. Surprisingly, we find that real wages for employees rose significantly during the crisis period, although those in the informal sector did not benefit to the same extent. Our results are similar to those from the earlier qualitative study, except that, because it focused on areas harder hit by the crisis, the qualitative study did not observe the significant gains made by employees over the crisis period.