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DID A CAPITAL DEEPENING PARADOX AND SWITCHING POINTS OCCUR IN INDONESIA?

Fitrady, Ardyanto

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

This paper discusses the empirical results of wage-profit rate schedules between 2000 and 2008 in Indonesia using input-output analysis. Using a mathematical approach, this paper has four main conclusions. First, there is a decrease in both wage share and profit margin in Indonesia. The decrease may be caused by the increase in relative prices of other inputs such as raw materials that generate inefficiency. Second, there is no proof of reverse capital deepening during the observed period and there is an indication that the capital was getting cheaper relative to other inputs during the period. Third, the capital-labor ratio tends to increase over time. Fourth, there is no proof of switching point and reswitching in technology during the period. However, this paper only provides us with an empirical result during the observed period. It is always possible to have a switching point or reswitching in the economy over a longer period.

TAX REFORM AND NONCOMPLIANCE IN INDONESIA

Iswahyudi, Heru

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

The purpose of this paper is to examine the impact of Indonesia’s tax reforms of 2000 and 2008/2009 on taxpayers’ noncompliance. Noncompliance is defined as the difference between the Value Added Tax (VAT) liability and the actual revenue. Data are mainly collected from the World Input-Output Database and Indonesia’s Central Board of Statistics. The methodology uses one of the ‘top-down’ approaches, in which national accounts figures are employed to arrive at an estimation of the VAT liability. It is found that compliance deteriorated when reform efforts were incomplete – that is when the reforms suffered from decelerations, setbacks or reversals. This paper contributes to the literature by providing a framework for analyzing the impact of tax reform on taxpayer’s compliance behavior.

THE IMPACT OF EARTHQUAKE ON CHILD TEST SCORE

Sulistyaningrum, Eny

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

Natural disasters always affect different aspects of individual life. They affect almost every part of life, such as the emotional, economic, physical, social, and environmental aspects. Children are believed to be very vulnerable to disasters. The increasing frequency of disasters and the intensity of their destruction motivate an analysis of the impacts of disasters, especially on education, for children. This paper uses a micro level survey data set from the Indonesian Family Life Survey (IFLS) which covers approximately 83% of the Indonesian population within the survey area. The main objective of this paper is to examine the effects of earthquakes on students’ performance, measured by their child test scores. This type of disaster was chosen because of its intensity, as measured by the percentage of people killed, and the percentage of people evacuated. Moreover, we also investigate the children who took the test immediately after the earthquake and compare their scores with those whose tests were a year after the earthquake. Arguably an earthquake is an exogenous event, so we use the exogenous variation of earthquake as a natural experiment design to estimate the effect of earthquakes on child test scores. A Difference in Difference model (DiD) can be used for estimating if a certain group is exposed to the causal variable of interest, such as an earthquake, and other groups are not. The results confirm that child test scores are significantly affected by earthquakes.

EFFECTS OF ETHICAL LEADERSHIP ON EMPLOYEE WELL-BEING: THE MEDIATING ROLE OF PSYCHOLOGICAL EMPOWERMENT

Rantika, Shania Dwi, yustina, andi ina

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

Leaders who promote ethical behavior are believed to affect their employees’ well-being. This study was conducted to examine psychological empowerment as the intervening variable that connects ethical leadership to employees’ well-being, work engagement, and emotional exhaustion. By using a mail survey, we distributed questionnaires to 219 auditors from 11 public accounting firms in Jakarta. All the hypotheses in this study were supported. Ethical leadership has a positive effect on psychological empowerment. Thus, psychological empowerment positively relates to work engagement and negatively relates to emotional exhaustion. The result demonstrated that psychological empowerment partially mediates the effect of ethical leadership on work engagement and fully mediates the effect on ethical leadership and emotional exhaustion. The findings reveal that ethical leadership stimulates the psychological empowerment of the employee, thus, it enhances work engagement and also minimizes emotional exhaustion.

THE IMPACT OF THE UNCONDITIONAL CASH TRANSFER PROGRAM (BLT) ON CIGARETTE CONSUMPTION IN INDONESIAN SOCIETY

Dwiputri, Inayati Nuraini

Journal of Indonesian Economy and Business Vol 32, No 2 (2017): MAY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

One of the purposes of the unconditional cash transfer program (Bantuan Langsung Tunai/BLT) was to help the poor and near-poor households to fulfill their basic needs. This study attempted to identify the impact of the BLT on cigarette consumption in society; as it is well known that smoking has more disadvantages than benefits. The study used data from the Indonesian Family Life Survey (IFLS) 2000 and 2007 to capture the impact of the BLT on the cigarette consumption of households. By controlling for the characteristics of the respondents, and using the fixed effect at household and village level as an estimation technique, the empirical results showed that in general there was a changing pattern of cigarette consumption in Indonesian society, to which the BLT program has contributed. By influencing the savings of households, the BLT program has significantly decreased cigarette consumption in Indonesia. It could be explained by the permanent income hypothesis, where the BLT transfer can be categorized as a transitory income in that hypothesis. This study can be an input and consideration for the transfer policy’s implementation in Indonesia in particular.

BUSINESS SUSTAINABILITY: ESSENTIALS FOR BUSINESS

., Sudiyanti

Journal of Indonesian Economy and Business Vol 29, No 2 (2014): May
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

A book review on business sustainability that is essentials for business.

THE IMPACT OF FEMALE DIRECTORS ON FIRM PERFORMANCE: EVIDENCE FROM INDONESIA

., Triana, Asri, Marwan

Journal of Indonesian Economy and Business Vol 32, No 1 (2017): JANUARY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

This research shows the impact of female directors on firm performance in Indonesia by using as its sample the public companies listed on the Indonesian Stock Exchange (IDX) from 2011 until 2015. There were 347 companies, with 1,735 samples observed. This research uses the multiple regression method. The model is a modified model from 9 recent articles published between 2012 and 2015. The empirical result shows that a female director has a positive significant effect on firm performance. The control variables, consisting of leverage, firm size and firm age have negative significance for firm performance. This research is conducted across 9 sectors of industrial classification, which support the International Finance Corporation (IFC) in increasing the number of female directors in Indonesia. For managers, this research will promote gender development in the boardroom, female executive training programmes as well as female representation on boards of directors. For regulators, this research may provide a contribution to gender representation in board’s policies, rules and regulations. This research can build awareness of women’s contributions to firms and encourage a greater female presence in the boardroom.

STIGLER’S INFLUENTIAL CONTRIBUTION TO ECONOMIC THOUGHT

Adji, Artidiatun

Journal of Indonesian Economy and Business Vol 32, No 1 (2017): JANUARY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

This paper analyzes George J. Stigler’s influential contributions to economic ideas, specifically on industrial structures, the functioning of markets, the causes and effects of public regulation, the economics of information, and on the development of economic thought. Stigler’s most influential contribution to economic thought came in his work on information theory. Treating information as a valuable commodity, he explained why prices differ for identical goods. From his work, many other theories have been built to explain economic behavior. A considerable number of works on decision making under uncertainty could not have progressed without an understanding of the role of information. His swing of the pendulum in economic regulation constitutes a great turnabout. He started research, known as public choice, which assumes that government policy makers are driven by self-interest rather than pure concern for the public’s welfare. His views have now become those of  the mainstream.

THE IMPACT OF TRADE ON CHILD LABOR: EVIDENCE FROM SELECTED SAARC AND ASEAN COUNTRIES

Ab-Rahim, Rossazana, Tariq, Bilal

Journal of Indonesian Economy and Business Vol 32, No 1 (2017): JANUARY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

Past studies have tended to investigate the relationship between trade and child labor under the traditional trade theories, while assuming that the trade in homogenous goods and the results show inconclusive evidence of a relationship. Hence, it would be interesting to investigate the trade effects of differentiated goods on child labor in the setting of the new trade theory. This study attempts to investigate the trade-induced child labor effects (selection, scale and technique effects) in selected Asian countries over the period from 1999 to 2013. The countries consist of the major South Asian Association for Regional Cooperation (SAARC) countries, namely: Bangladesh, India, Pakistan, Nepal, and Sri Lanka and selected ASEAN countries, namely: Cambodia, Indonesia, the Philippines, and Thailand, where child labor is most common. The results of this study confirm that the total impact of trade on child labor also needs to account for the selection effect, in addition to the scale and technique effects. The findings imply trade liberalization hampers the child labor market in the context of the trade in differentiated goods.

THE EFFECT OF KNOWLEDGE SOURCES ON INNOVATION CAPABILITIES AMONG RESTAURANTS AND CAFÉ BUSINESSES IN INDONESIA

Utami, Tri Lestari Wahyuning, Indarti, Nurul, Sitalaksmi, Sari, Makodian, Nuraksa

Journal of Indonesian Economy and Business Vol 32, No 1 (2017): JANUARY
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

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Abstract

To conduct innovation, firms absorb and utilise internal and external knowledge. This study examines the effect of internal and external knowledge, in terms of the breadth and depth of knowledge sources, on a firm’s innovation. The breadth of knowledge sources refers to the amount of knowledge sources used within the firm. The depth of knowledge sources is the amount of knowledge sources intensively used by the firm. This study is aimed at answering the following questions. a) What knowledge sources are mainly used? b) What type of innovation is frequently conducted? c) What are the effects of the breadth and the depth of knowledge sources on the innovation capabilities among Indonesian restaurants and cafés? The resource-based view and resource dependency theory are used to understand the role of internal and external knowledge on innovation within a firm.We distributed a semi-structured questionnaire to 101 owners/managers, using a purposive, in several cities in Indonesia, such as Bandung, Denpasar Bogor, Malang, Yogyakarta and other cities in East Java. The results show that the Indonesian restaurants and cafés utilised external knowledge sources more often than internal ones. The firms produce more incremental product innovations than radical ones. The depth of the internal knowledge sources has a positive significant impact on the firms’ innovation capabilities, which supports the previous studies. Meanwhile, the breadth of the internal knowledge sources is found not to have a significant effect on innovation. Additionally, the effects of the breadth and depth of the external knowledge sources on the innovation capabilities are also insignificant.

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