By Devanto Pratomo and Chris Manning
The Indonesian labour market is heavily segmented between formal and informal sector. It has undergone a fundamental transformation in the past decade: shifting the large numbers of mostly informal workers out of agriculture through the growth of into the formal sector. These structural changes have been key drivers of the economic development in East Asia, see for example China and Vietnam.Understanding the flexibility of the labour market across sectors in supporting the growth of formal sector jobs. Is the shift among new entrants or do we see more employed people moving from the informal to the formal sector? What are the implications of these developments for welfare, particularly for wages and earnings? Who enjoy more in terms of wages and earnings among the movers?