Do minimum wages affect employment? Evidence from the manufacturing sector in Indonesia

IZA Journal of Labor & Development

Table 2 Employment effects of minimum wages on production workers

Dependent variable: Log (Number of paid production workers)
	All firms		Small firms		Large firms
	(1)	(2)	(3)	(4)	(5)	(6)
Log (Min. Wage)	−0.0469***	−0.0342**	−0.0251**	−0.0265*	−0.0270	0.0166
	(0.0136)	(0.0161)	(0.0120)	(0.0145)	(0.0265)	(0.0312)
Log (Firm Age)		0.1881***		0.0982***		0.2293***
		(0.0065)		(0.0056)		(0.0135)
Foreign Share		0.0019***		0.0007***		0.0013***
		(0.0002)		(0.0002)		(0.0002)
Export Share		0.0007***		0.0005***		0.0003***
		(0.0001)		(0.0001)		(0.0001)
Govt. Share		0.0001		−0.0000		0.0001
		(0.0002)		(0.0001)		(0.0003)
Fixed Effects	Firm	Firm	Firm	Firm	Firm	Firm
Year Effects	Yes	Yes	Yes	Yes	Yes	Yes
Observations	290,118	206,375	221,300	157,761	66,677	47,117
Number of Firms	40,169	38,563	35,188	33,534	9285	8893
R-squared	0.916	0.919	0.802	0.809	0.846	0.851

Notes: The sample includes only firms with non-zero production and non-production workers, firms that continuously observed from year to year, and firms observed more than once during the sample period (1993–2006). Columns (2) (4) and (6) have fewer observations than other columns because the additional regressors have missing values in 2001, 2002, 2003, and 2005. Robust standard errors clustered by firm are reported in parentheses. ***p < 0.01, **p < 0.05, *p < 0.1