00074918.2013.850638

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Bulletin of Indonesian Economic Studies

ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20

Determinants of Labour Migration Decisions: The

Case of East Java, Indonesia

Wildan Syafitri

To cite this article: Wildan Syafitri (2013) Determinants of Labour Migration Decisions: The Case of East Java, Indonesia, Bulletin of Indonesian Economic Studies, 49:3, 385-386, DOI: 10.1080/00074918.2013.850638

To link to this article: http://dx.doi.org/10.1080/00074918.2013.850638

Published online: 05 Dec 2013.

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Abstracts of doctoral theses on the Indonesian economy 385

Determinants of Labour Migration Decisions:

The Case of East Java, Indonesia

Wildan Syaitri ([email protected]) Accepted 2012, University of Kassel

Labour migration, both internal and international, involves labour withdrawing from one sector and moving to meet the demand in another. Deined more nar-rowly, it involves an individual leaving his or her place of residence, to work elsewhere, for more than six months. Migration is a common inancial strategy in Indonesia’s rural areas: by allocating labour resources among different regions or countries, households can reduce risk and increase their income.

When considered as a component of a social group’s family or household strat-egy, migration can be largely explained by the theory of the new economics of labour migration – a useful analytical tool for understanding how migration can transform the economies of families with migrants. According to migration theo-ries (such those of human capital, networks and mobility transition), elements including wage gaps, income risks, education, gender, family, infrastructure, landownership and credit access can inluence an individual’s decision whether to migrate, either to a city or to another country. These theories also explain that such decisions depend on human, social, and physical capital, as well as on migra-tion networks and government policy.

This thesis aims to identify and analyse the determinants of the decisions behind rural–urban migration and international migration in the rural Malang district of East Java, using primary data drawn from a survey of 360 respond-ents across all 12 villages in the kecamatan (sub-district) of Wagir. It also examines secondary data from government institutions, particularly Statistics Indonesia’s 2006 Village Potential (Potensi Desa) survey of the province, which reported on the migration activities and socio-economic status of selected households from 7,677 villages.

The study’s data analysis uses probit and Tobit estimations to provide evidence that numerous variables inluence migration decisions. It inds, for instance, that the educational background, sex and age of individuals have a positive and sig-niicant effect on whether they migrate abroad. The education variable, in particu-lar, provides a positive and signiicant coeficient for the propensity to migrate – that is, the greater the level of education received by individuals in rural areas in East Java the more likely they are to seek employment overseas. Higher levels of education expand individuals’ migration options, not only to countries that offer higher wages but also to those that would ensure their rights as domestic workers. Women of working age are also more likely to migrate abroad than their male counterparts.

Poverty is also a positive and signiicant coeficient for migration; the higher the number of poor people living in a village, the more likely it is that individu-als will move overseas for work. Conversely, if individuindividu-als have access to water, health insurance or markets, or if they live in villages that have a large proportion of non-irrigated land being used for non-agricultural activities, they will be less likely to seek employment elsewhere.

This thesis asserts that local and provincial administrations should focus their developmental efforts on villages with non-irrigated land, or on those

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386 Abstracts of doctoral theses on the Indonesian economy

disadvantaged by a scarcity of land and water resources. Improving credit and market access, for example, would encourage individuals to remain in rural areas, promote self-reliance, and increase both agricultural productivity and household incomes.

Regional Dimensions of Monetary Policy in Indonesia Masagus M. Ridhwan ([email protected])

Accepted 2011, VU University, Amsterdam

Monetary policy is structurally designed to achieve national targets, most notably price stability. Given that each economy has its own structure and characteris-tics, a uniform monetary policy across different regions may generate differential shocks and have distributional implications. This thesis examines the empirical applications of monetary policy and other inancial factors on Indonesia’s eco-nomic development.

Its survey of the literature inds that the conventional view of previous studies posits the neutrality of money – that is, that money functions only as a mirror of real (regional) economic activity. Given the existing regional differences in rates of return to capital investment, this view also asserts that such differences can be eliminated through interregional capital mobility and arbitrage mechanisms in an integrated market. Yet such a view is rather simplistic, because regional inan-cial markets are not necessarily fully integrated. The literature points at imperfect inancial integration arising from physical, cultural and institutional distances.

This thesis proposes a simple but effective way of conducting a meta-analysis on a type of literature, based on sources of regional heterogeneities in response to national monetary policy on economic activity across regions or countries within a monetary union. After controlling for differences in study characteristics and a broad set of conditioning variables, this thesis inds that the differential output effects following monetary-policy shocks are greater in regions with economies that rely to a greater degree on more capital-intensive industrial sectors, particu-larly manufacturing, than in regions with economies that rely more on agriculture and mining.

In its overview of Indonesia’s economy, this thesis pays speciic attention to regional development in the era of iscal decentralisation and the geographical aspects of banking intermediary functions. It uses vector autoregression (VAR) models to examine the effects of monetary policy on the development of Indone-sia’s regional output, and it provides empirical evidence of the regional effects of monetary policy. Its main indings are as follows: irst, that the output effects of the magnitude and timing of monetary-policy actions tend to luctuate, consistent with theory, across Indonesia’s regions; and, second, that the impulse-response functions derived from the VAR models show that regional output generally falls in response to interest-rate shocks, particularly in the short run.

This study also determines the extent to which the interest rates of Indone-sia’s local banks vary. It inds substantial differences across regions in regional