REVISITING THE RETURNS TO EDUCATION AND GENDER WAGE DISPARITIES IN INDONESIA: EVIDENCE FROM IFLS4
DOI:
https://doi.org/10.5281/zenodo.17446703Keywords:
returns to education, gender wage gap, Indonesia, IFLS4, income inequality, labor market.Abstract
This study investigates the relationship between educational attainment, gender, and income in Indonesia
using individual-level data from the Indonesia Family Life Survey (IFLS4). Applying an Ordinary Least Squares (OLS)
regression model with log-transformed income as the dependent variable, the analysis explores whether years of
schooling and gender significantly affect earnings. The findings indicate that while education has a positive association
with income, the effect is statistically insignificant. Similarly, no meaningful income gap was observed between male
and female respondents after controlling for education. These results suggest that the economic returns to education in
Indonesia may be limited by structural labor market conditions, particularly the dominance of informal employment and
mismatches between education and job requirements. Although gender did not emerge as a significant predictor in this
sample, broader national data continue to show disparities, pointing to the need for cautious interpretation. The study
highlights the importance of aligning educational systems with labor market demands and addressing systemic barriers
to wage equity.
References
Becker, G. S. (1993). Human capital: A theoretical and empirical analysis with special reference to education (3rd ed.).
University of Chicago Press.
BPS. (2023). Statistik Gender Tematik: Profil Perempuan Indonesia. Badan Pusat Statistik. https://www.bps.go.id
Fanggidae, V., & Nugroho, H. (2021). The quality of employment and earnings: Evidence from urban Indonesia. Bulletin
of Indonesian Economic Studies, 57(3), 295–318. https://doi.org/10.1080/00074918.2021.1929402
ILO. (2023). Women and men in the informal economy: A statistical picture – Indonesia 2023. International Labour
Organization. https://www.ilo.org
Rahardja, S., & Varela, G. (2020). Skills mismatch and education outcomes in Indonesia. World Bank Policy Research
Working Paper No. 9255. https://doi.org/10.1596/1813-9450-9255
RAND. (2008). Indonesia Family Life Survey (IFLS-4) documentation. RAND Corporation.
https://www.rand.org/well-being/social-and-behavioral-policy/data/FLS/IFLS/ifls4.html
Suryadarma, D., Suryahadi, A., Sumarto, S., & Rogers, H. (2006). Improving student performance in public primary
schools in developing countries: Evidence from Indonesia. Education Economics, 14(4), 401–429.
UNESCO. (2023). Education in the digital era: Implications for workforce readiness in Southeast Asia. https://www.
unesco.org/reports
Utomo, A., & McCarthy, J. (2022). Women’s labor force participation and the rise of precarious employment in Indonesia.
Journal of Southeast Asian Economies, 39(2), 214–230.
https://doi.org/10.1355/ae39-2e
World Bank. (2023). Women, business and the law 2023.
World Bank. (2024). Gender Gaps and Employment Transitions in Indonesia: New Insights.
