Determinants of Sectoral Labor Migration and Their Contribution to Enhancing Labor Productivity: A Case Study from Indonesia

Bronson Marpaung, Aulia Keiko Hubbansyah

Universitas Diponegoro (Indonesia), Universitas Pancasila (Indonesia)

This study aims to analyze the determining factors influencing the migration of agricultural labor in Indonesia. In examining the dynamics of the agarian labor share in Indonesia, the study uses several variables divided into three groups: demographic factors, structural factors, and economic factors. This study will also examine the contribution of agricultural labor migration to the Non-agricultural sector toward productivity growth in the economy. Using secondary data from various institutions, including the World Bank, Food and Agriculture Organization (FAO), and UNCTAD. The data collected consists of time series from the period 1980 to 2020; this study finds that agricultural labor migration in Indonesia heavily depends on developments in the Non-agricultural sectors, including both industry and services, education levels, and agricultural mechanization. However, foreign direct investment (FDI) does not appear to reduce the share of agricultural labor in Indonesia. This is because FDI tends to flow into sectors that rely on technology and automation. Agricultural workers may lack the skills required by these industries. FDI often seeks workers with high technical or managerial skills that do not align with the skill sets of Indonesian agricultural workers, most of whom have an education level below junior high school.

Article link: https://www.asianinstituteofresearch.org/JEBarchives/determinants-of-sectoral-labor-migration-and-their-contribution-to-enhancing-labor-productivity%3A-a-case-study-from-indonesia--