Jobless Growth or Structural Transformation? Labor Market Dynamics in Morowali, Indonesia’s Nickel-Based Industrialization Hub
DOI:
https://doi.org/10.36574/jpp.v10i1.838Keywords:
industrialization, jobless growth, employment elasticity, labor market transformation, resource-based industrialization, global value chains, labor formalization, skill upgrading, wage dynamics, Indonesia, Morowali, nickel industryAbstract
This paper examines whether rapid industrialization generates broad-based employment or leads to jobless growth, using the case of Morowali, Indonesia’s flagship nickel-processing hub. Over the past decade, Morowali has experienced extraordinary output expansion driven by resource-based industrialization and integration into global value chains. However, its labor market implications remain unclear.
Using a panel dataset covering 2015–2024 and employing a multi-method empirical strategy—including employment elasticity estimation, difference-in-differences analysis, wage modeling, and structural labor assessment—this study provides a comprehensive evaluation of both the quantity and quality of employment.
The results reveal a consistent pattern. First, employment elasticity is low (0.115), indicating weak responsiveness of employment to output growth. Difference-in-differences estimates further show no statistically significant increase in employment relative to the control region. Second, industrialization has a strong and significant impact on labor market structure, increasing the share of formal employment by more than 14 percentage points and contributing to moderate skill upgrading. Third, while wages rise in absolute terms, there is no evidence of accelerated wage growth relative to the control region, suggesting uneven distribution of gains.
Taken together, the findings indicate that Morowali represents a case of high-growth, capital-intensive industrialization characterized not by employment expansion, but by structural labor transformation. This study contributes to the literature by moving beyond the binary distinction between employment boom and jobless growth, highlighting the decoupling between economic growth and multiple dimensions of labor market outcomes.
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