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The role of minimum wage in shaping migrant labour market recovery in Indonesia: evidence from post-COVID-19 pandemic

Year: 2026

Type: article

Abstract: This study examines the association between minimum wage policies and the labour market recovery of internal migrant workers in Indonesia following the COVID-19 pandemic. Using pooled 2019–2022 National Labour Force Survey data, the study estimates a multinomial logit model of four mutually exclusive post-separation labour-market outcomes. The results show that migrant workers are more likely to re-enter the labour market through self-employment rather than formal jobs. However, higher minimum wages are associated with greater probabilities of self-employment and lower probabilities of unemployment among both migrant and non-migrant workers, while no statistically significant associations are found for either paid-employment outcome. These effects are more pronounced for urban migrants, married individuals, and those with higher education levels. The findings indicate that aggregate estimates conceal substantial heterogeneity across migrant groups, particularly by location and gender. By modelling post-separation labour-market states as competing outcomes and examining heterogeneity across migrant groups, the study extends existing Indonesian evidence beyond aggregate employment and formal–informal labour-market allocation.

Source: Cogent Economics & Finance

DOI: 10.1080/23322039.2026.2728295

Authors: Muhammad Salahudin Al Ayyubi, Devanto Shasta Pratomo

Institution: University of Brawijaya

Language: English

Topic: Labor market dynamics and wage inequality

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, No poverty, Reduced inequalities, Peace, justice, and strong institutions

Open Access status: gold

Estimated APC paid: $1,165