Determinants of Labor Market in Jakarta Metropolitan Area: A Survival Analysis of Commuters

Abstract

This study aims to assess the determinants of the labor market in the Greater Jakarta Area (Jabodetabek) with a population of 27.9 million (2010 census) and growth rate of 3.6 percent per annum over the period 2000-2010. With a total area of 4,384 square kilometers (1,693 sq mi), the city has a very high population density of 14,464 people per square kilometer (37,460/ sq mi), while the metro area has a density of 4,383 people/sq km (11,353/sq mi). The paper employs the survival regression analysis by incorporating attributes of commuter, namely gender, age, distance, travel time, wages, stress, education level, double income households and home ownership. The area consists of Jakarta as the receiving labor market and eight municipalities and regencies as labor suppliers. The study utilizes a cross-section data from a commuter survey with more than 4,000 respondents participated using different modes of land transport. The results reveal that some determinants have influenced commuters' resiliency and their willingness to participate in the receiving labor market. This study found that gender, distance, wages and home ownership do not affect the respondent’s decision whether to stay or quit as commuters. On the other hand, the fittest model exhibits that age, education level, stress, travel time and double income households have significant effects on individual's decision to stay or quit as a commuter. It is found that gender, distance, wages and home ownership do not matter for respondent’s decision on whether to stay or to quit as commuters. The model exhibits that age, education level, stress, travel time and double-income household have significant effects on an individual's decision to stay or quit as a commuter. Education level has a positive effect; on the other hand, age, stress, double-income household and travel time have a negative effect. The policy implications for improving the labor supply provision and some contested policy options are suggested, such as the provision of affordable housing in Jakarta, the improvement of commuting enjoyment, the establishment of child care facilities in the office buildings and the creation of more sophisticated jobs within the Jakarta’s surrounding municipalities and regencies.

Exploring Local Labor Markets and Knowledge Spillover from a Spatial Perspective

“…Consequently, while aggregate-level education can drive productivity in each region of the Jakarta Metropolitan Area, the impact of highly educated individuals is different. This result disagrees with a number of studies that emphasize the value of high human capital in densely populated areas or cities (de la Roca & Puga, 2017;Di Giacinto et al, 2020;Duranton & Puga, 2020;Glaeser & Maré, 2001;Glaeser & Resseger, 2010;Glaeser & Xiong, 2017;Groot & de Groot, 2020;Halfdanarson et al, 2008;Henrekson, 2020;Kijek & Kijek, 2019;Lamorgese et al, 2019;Lee et al, 2017;Lu, 2022;Moretti, 2010;Shi et al, 2022;Tadjoeddin & Mercer-Blackman, 2018;Venhorst, 2017;Yin et al, 2022;Zgarrick et al, 2020). Presumably, this outcome stems from various factors, including: 1) the limited share of highly educated individuals in the labor market; 2) a mismatch between tertiary education curricula and labor market demands; 3) Indonesia's status as a developing country rather than a developed one; 4) disparities in school distribution in the Jakarta metropolitan area; and 5) the migration of highly educated individuals to other regions or countries.…”

“…Meanwhile, the presence of educated individuals seems to decrease productivity in their respective regions, while also impacting the minimum wage in those regions and neighboring areas (see Table 5). This suggests that higher wages in certain regions attract educated individuals, prompting them to migrate, as noted by Setyawan et al (2020). It's likely that firms or labor demand prefer locations with high education rates as an incentive for offering higher salaries.…”

“…In other words, urban agglomeration means that the local labor market's size can yield productivity gains (Ciccone, 2002;de la Roca & Puga, 2017;Glaeser &Resseger, 2010;Groot & de Groot, 2020;Lee et al, 2017;Prasert-soong&Puttanapong, 2022;Venhorst, 2017). The higher productivity observed in a dense labor market could be influenced by preferences that arise due to increased competition in that market (Ciccone, 2002;Di Giacinto et al, 2020;Gould, 2007;Henderson & Turner, 2020;Moretti, 2010;Shi et al, 2022;Sveikauskas, 1975;Tadjoeddin& Mercer-Blackman, 2018). Moretti (2010) contends that the size of the labor market is correlated with reduced unemployment risk for employees and the presence of job vacancies for companies, both of which reflect wage differences.…”

“…Setyawan et al ( 2020) showed Jakarta's significance in offering ample job opportunities for individuals with higher education levels, leading to commuter activities that influence economic development in their respective regions. This effect reverberates in terms of economic activities and the regional minimum wage (Setyawan et al, 2020). As far as education is concerned, Muhaimin et al (2022) showed that achieving educational equity through the school zoning system in Jakarta hinges on the existence of spatial justice.…”

“…(de la Roca & Puga, 2017;Di Giacinto et al, 2020;Glaeser & Maré, 2001;Glaeser & Xiong, 2017; Groot & de Groot, 2020;Henderson & Turner, 2020;Lee et al, 2017;Moretti, 2010;Prasertsoong & Puttanapong, 2022;Shi et al, 2022;Tadjoeddin & Mercer-Blackman, 2018;Venhorst, 2017). This convergence of educated labor in urban areas is highlighted byDuranton & Puga (2020),Glaeser & Maré (2001),Lamorgese et al (2019),Lu (2022),Moretti (2010), Shi et al (2022), and Tadjoeddin & Mercer-Blackman (2018. Consequently, urban spillovers encompass both premium wages and knowledge sharing.…”