The Effect of Idiosyncratic Shocks on Labor Market Outcomes of Informal Households in Indonesia

Abstract

The informal households are considered to be the most vulnerable to any idiosyncratic shocks rather than the formal ones. Unfortunately, the established literatures mostly do not specifically emphasize the analysis of this group. This study contributes to literatures on the specific analysis on the effects of idiosyncratic shocks namely sickness, death, and job loss on the labor market outcomes of informal households in Indonesia. The analytical method used is the estimation of panel data with a fixed-effect model to control for unobserved heterogeneity.

The Behavior of Households Using the Dynamic Stochastic General Equilibrium Model: Alternative Models

“…Recent studies using this characteristic comprise Obstfeld (199 (1997), Schmitt-Grohe (1998), Neumeyer and Perri (2005), Abdullah Yusof et al (2015), Azlina al. (2019), Chang et al (2020), Santoso andSriyana (2020), andBaharudin et al (2021).…”

“…The first model assumes an endogenous discount factor (Uzawa 1968). Recent studies using this characteristic comprise Obstfeld (1990), Mendoza (1991), Uribe (1997), Schmitt-Grohe (1998), Neumeyer and Perri (2005), Abdullah Yusof et al (2015), Azlina et al (2018), Ngadiman et al (2019), Chang et al (2020), Santoso and Sriyana (2020), and Baharudin et al (2021).…”