Indonesia's Higher Education System : How Responsive is it to the Labor Market?
Indonesia is at a development crossroads. It successfully weathered the 2008 international financial crisis, and it has shown resilience in the current turbulent times. Its economy is now one of the largest 20 economies in the world and it has ambi...
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| Language: | English en_US |
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Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/06/19790477/indonesias-higher-education-system-responsive-labor-market http://hdl.handle.net/10986/20017 |
| Summary: | Indonesia is at a development
crossroads. It successfully weathered the 2008 international
financial crisis, and it has shown resilience in the current
turbulent times. Its economy is now one of the largest 20
economies in the world and it has ambitious plans to achieve
high-income status and join the G-7 by 2030. Yet the
challenges it faces are daunting. As highlighted in the
recent Indonesia Economic Quarterly report by the World
Bank, the status quo may not be enough to maintain current
growth rates in light of domestic and policy pressures. And
even maintaining the current rates of growth will not bring
the country to high income status by the target year. This
paper is organized as follows. Section two presents a
framework to look at incentives and argues that without the
right system in place, the tendency of the education sector
will not necessarily be to align its supply with the demands
of the labor market. The section discusses some of key
features of the system in Indonesia. Section three looks at
the performance of higher education graduates in the labor
market, their labor force participation, unemployment rates,
the types of jobs they obtain and trends in the returns to
higher education. Section four takes patterns in employment
and returns to education, as well as employer surveys, to
find signs of misalignment between supply and demand in the
types of degrees of graduates, the sectors where they are
employed and the skills they bring with them. Finally,
section 5 concludes with some suggested policy directions
and future research. |
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