Wage dispersion and productivity: Evidence from large and medium-scale manufacturing firms in Indonesia

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

PhD Seminar (Econ)

Date & time

Tuesday 26 March 2019


Crawford Seminar Room 1, JG Crawford Building 132, Lennox Crossing, ANU


Martha Primanthi


Associate Professor Paul Burke

Does the degree of dispersion of wages to a firm’s employees influence its productivity? This research employs survey data from Indonesia over the period 2000–2015 to explore this question. Panel estimation models reveal a non-linear relationship: a positive relationship between wage dispersion and firm productivity up to a certain level, and a negative relationship beyond that level. The findings imply that excessive wage dispersion can harm productivity. The utilised survey data-sets are from Indonesia’s Labour Force Survey and also the Large and Medium Manufacturing Industries Survey.

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