Efficiency and Elasticity of Labor Use on Economic Sectors in Indonesia

Advances in Economics, Business and Management Research, volume 86, ISSN 2352-5428, 2019

2nd International Conference on Banking, Accounting, Management and Economics (ICOBAME 2018)

6 Pages Posted: 22 Aug 2019

See all articles by Tongam Sihol Nababan

Tongam Sihol Nababan

University of HKBP Nommensen, Faculty of Economics

Date Written: July 2019

Abstract

The research objectives are: (1) to analyze the level of efficiency and elasticity of the use of labor in Gross Domestic Product (GDP) based on economic sectors in Indonesia in the period of 2010-2016, (2) to find out the changes/ transformations in the use of labor among the economic sectors in Indonesia in the period of 2010-2016. The analytical method used is a descriptive and analytical method of the Cobb-Douglass production function. The results showed that during the period of 2010-2016 there had been a decrease in the efficiency of labor absorption in GDP at an average of 6.5% per year. The values of labor elasticity against GDP during the period 2010-2016 are inelastic (e <1) but it is still positive. This shows a tendency to decrease changes in employment absorption of GDP. There is still an incompatibility in the business field between the ability to contribute to GDP with the ability to absorb labor. When viewed from the contribution to GDP, the transformation from the agricultural sector to the industrial sector, the service sector field and other economic sectors have been successful, but when viewed from the absorption of labor, the transformation has failed.

Keywords: efficiency; elasticity; economic sector; GDP; labor

JEL Classification: J01, J23, J24

Suggested Citation

Nababan, Tongam Sihol, Efficiency and Elasticity of Labor Use on Economic Sectors in Indonesia (July 2019). Advances in Economics, Business and Management Research, volume 86, ISSN 2352-5428, 2019. Available at SSRN: https://ssrn.com/abstract=3440068

Tongam Sihol Nababan (Contact Author)

University of HKBP Nommensen, Faculty of Economics ( email )

Jln. Sutomo No. 4A
Medan, North Sumatra 20118
Indonesia
08126411543 (Phone)

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