Bulletin of Monetary Economics and Banking

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Minimum wages have been a major consideration in Indonesia in recent years, as the government has strongly pursued a minimum wage policy. The levels of regional minimum wages have been increased significantly since 1989, and there is a concern that these increases may have slowed employment growth. Therefore, the purpose of this study is to examine the employment effects of minimum wages, using data for 26 provinces, covering the period from 1988 to 1999. The study focuses on different groups of workers within the urban formal sector. The results of graphical and statistical analysis indicate some support for the conventional theory of the negative employment effects of minimum wages.

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