Employment growth and spatial concentration in Indonesia

This article examines the dynamics of employment concentration in Indonesia over the period 1994 to 2004. Using a spatial lag model, we analyze the relationship between districts' employment growth rates and their spatial characteristics, which includes natural geographic isolation, distance to urban centers and population of surrounding districts. The empirical models are estimated for the entire economy and nine employment sectors. The results suggest distance to larger population centers negatively affects growth. Employment became more evenly dispersed in Indonesian districts during the sample period, but this dispersion was primarily driven by the outward expansion of larger urban districts. It was also found that districts with higher levels of sectoral specialization (lower employment diversity) experienced lower growth rates.