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EFFECT OF WAGES ON MULTIPLE JOB HOLDING DECISIONS IN INDONESIA: EVIDENCE FROM THE INDONESIAN FAMILY LIFE SURVEY (IFLS) DATA OF 2007 AND 2014
Niken Dwi Wijayanti
Faculty of Economics and Business, Universitas Indonesia, Indonesia (nikendwi.wijayanti86gmail.com)
Vid Adrison
Faculty of Economics and Business, Universitas Indonesia, Indonesia (vadrisonyahoo.com)
ABSTRACT
Multiple job holding - i.e., a phenomenon in which workers have more than one job-has become a trend in developed countries and is beginning to occur in developing countries, such as Indonesia. Existing studies provide the evidence that wages are a significant and consistent criterion to determine multiple job decisions. Wage increases in the primary job will decrease the incentive to have a second job as the reservation wage increases. However, we do not find any study which links the current multiple job decision with the past multiple job status. In this study, we use data from the Indonesian Family Life Survey (IFLS) in 2007 and 2014 to investigate whether or not a wage increase in the primary job reduces the incentive to have asecond job in 2014, controlling for the multiple job status in 2007. Using logit and multinomial logit estimations, we find that the wage increase in the primary job decreases the probability of having a second job in 2014.
Keywords: multiple job holding, wages, employment, main job, second job JEL Classification: D31, I31, J22, K31
2 Journal of Indonesian Economy and Business Wijayanti and Adrison INTRODUCTION
1. Background
The phenomenon of workers who have more than one job is known as multiple job holding (Shishko Rostker, 1976). There are four main models that illustrate the motives that encourage workers to have multiple jobs (Casacuberta Gandelman, 2012; Martinez, Western, Haynes, Tomaszewski, Macarayan, 2014; Wu, Baimbridge, Zhu, 2009; Panos, Pouliakas, Zangelidis, 2014). The first is the hours constrained model, in which workers are unable to increase their working hours to adesired level due to the rigidity of the working hours in the primary job (i.e., the maximum provision for working hours set by the company). Therefore, workers decide to seek asecond job (Bell, Hart, Wright, 1997; Shishko Rostker, 1976; Smith Conway Kimmel, 1998).
The willingness of the worker to increase hisher working hours is closely related to the low or inadequate income from the main job. Workers will allocate their working time between two different jobs to meet their revenue objectives, assuming that they offer different financial and non financial benefits (Lundborg, 1995). This second model describes a worker doing multiple jobs based on the target income model.
The third model is the main job insecurity model. The changing times and the high level of competition make people consider having a second job. Workers whose primary jobs are vulnerable to, or at risk of termination will actively participate in multiple job holding to mitigate the possible effects of unemployment (Bell et al., 1997).
The fourth model that encourages the occurrence of multiple job holding is the heterogeneous job model. In this model, some workers may find an incentive to have more than
one job because the different jobs are not perfect substitutes. This means that the wages paid and utility lost from forgoing leisure may not adequately reflect the benefits and costs of work (Smith Conway Kimmel, 1998).
In Indonesia, research into multiple job holding is still a bit in the academic realm. To the best of our knowledge, Martinez et al. (2014) were the first to analyze multiple job holding in Indonesia using the Indonesian Family Life Survey (IFLS) data from 1993, 2000, and 2007. They showed that the proportion of multiple job holders had increased over time, from 20 of the IFLS sample in 1993 to 23 and 24 in 2000 and 2007 respectively. This increase suggests that multiple job holding becomes an important issue for the Indonesian labor market. They conclude that the main motivation for multiple job holding is the constraints faced in the main job, both income constraints, and non- income constraints. An increase in income in the main job reduces the probability of workers having multiple jobs. Although income is increasing over time, the number of multiple job holders are increasing. In our study, the empirical data indicates that more than 40 of people who had multiple jobs in 2007 still had multiple jobs in 2014, suggesting that it takes place permanently.
Some previous studies provide evidence that multiple job holding is either a permanent or temporary phenomenon of the labor market. A permanent phenomenon is a condition in which multiple job holding takes place continuously over time. Workers with more than one job, because of heterogeneous job motives tend to do so permanently. For example, university lecturers may also work on a consultation project, because both jobs are job-packaged, where the work is complementary (Bell et al., 1997; Kimmel Smith Conway, 2001). On the other hand, a multiple job holding is temporary
Journal of Indonesian Economy and Business, Vol. 33, No. 1, 2018 3
if it takes place at a given time, where there are
job holding decreased when individuals
constrained hours, increased labor market experienced an increase in income from their uncertainty, and financial shocks. In this case,
main job, demonstrating consistency with the
multiple job holding is deemed to be temporary
target income model. However, the presence of
to achieve a sub-optimal utility level derived
high-income individuals who perform multiple
from one's primary job, or as protection against
job holding explains that this is not always due
the risks of unemployment (Casacuberta
to financial constraints in the main job. In line
Gandelman, 2012; Kimmel Smith Conway,
with the findings, Panos et al. (2014) identify
2001; Panos et al., 2014; Wu et al., 2009). When
that for low-income groups, multiple job holding
faced with this, workers will look for opportu-
is more of a necessity than an option. As for
nities to overcome these obstacles, one of which
stable income groups, multiple job holding can
is by finding a new job. There is some limited
be used to acquire new skills and develop skills,
empirical evidence suggesting that constraints in
explore alternative career paths and pursue the
their main job play a role in the employee's
possibility of self-employment activities through
decision to change the main job or do a side job
self-employment.
(Altonji Paxson, 1988; Paxson Sicherman,
Based on the above description, multiple job
1996). Thus, if the worker has multiple jobs due
holding can provide several benefits for the
to the response to constraints in the main job, it
worker. One of them is to provide an extra
will take place temporarily. However, there are
income which is very useful, especially for
situations where workers who are constrained in
emergency purposes (Danzer, 2011). Multiple
their main job may decide to have side jobs
jobs can also provide additional satisfaction,
related to their interests so that there is a
especially when the second job is related to one's
possibility of permanence.
interests (Renna Oaxaca, 2006). They can also
Research into multiple job holding highlights
maintain the flexibility of working time (for
that wages are a significant and consistent
example, women who have small children can
criterion. Empirical evidence suggests that do two part-time jobs, one job in the morning increased wages in the main job will increase the
when the child is in school and the other in the
minimum wage that drives the individual to have
afternoon when her husband comes home from
a second job (reservation wage). Increased
work and can replace her in taking care of the
wages in the main job can also reduce the
child) (Averett, 2001). In addition to any
number of hours worked in the second job
financial constraints, recent evidence from
(Shishko Rostker, 1976). Wu et al. (2009)
industrialized countries suggests that multiple
suggest that male workers who are not satisfied
job holding can also be used to further develop
with their total earnings from their main job will
any current skills and acquire new skills, which
be highly motivated to find second jobs, while
in turn can lead to better employment oppor-
higher-wage job opportunities will increase the
tunities (Panos et al., 2014). This type of labor
supply of work-hours in the second job for both
supply behavior can be part of a person's
men and women. This indicates that the portfolio as a long-term strategy for future career incentive to have multiple jobs is due to
development. Therefore, it is safe to conclude
financial pressures and a desire to improve or
that financial and non financial factors can
maintain a standard of living. Martinez et al.
encourage a person to engage in multiple job
(2014) also found that the tendency for multiple
holding.
4 Journal of Indonesian Economy and Business Wijayanti and Adrison
However, in some cases, multiple job holding is also potentially harmful to workers. Second jobs can reduce a person's productivity due to the shifting focus of the worker, due to the heavy workload, including the potential for conflict between the demands of the main job and the second job. Multiple job holding can also mean less time to find more productive job prospects. Furthermore, this type of labor supply behavior can have adverse consequences for one's health and family relationships if it means working more extended hours (Alam, Biswas, Hassan, 2009; ILO, 2004; Panos et al. 2014). Thus, although multiple job holding has the potential to provide more economic opportu- nities and strengthen the workforce, it also allows for increased employment vulnerability to socio-economic uncertainty.
Due to the losses that may result from multiple job holding, Dickey, Watson, and Zangelidis (2009) identified three main reasons why a person does not have multiple jobs. First, individuals are not interested in multiple job holding. Secondly, they want multiple jobs but cannot find a second job with interesting charac- teristics. Third, the individual wants multiple jobs but does not find a second job. There are two possible reasons why an individual cannot find a second job while another individual can. First, individuals may be less informed about the available job opportunities. Secondly, the
individual applying for a second job may not meet the criteria desired by the company.
2. Research Problem
The relatively high number of workers with multiple jobs in Indonesia, either permanently or temporarily has become an interesting topic for research. The IFLS data indicate that 45 of workers who were holding multiple job sin 2007 continued to do so in 2014, indicating a permanent phenomenon (Table 1). Meanwhile, the other 55 do so temporarily. Approximately
23 of single job holders in 2007 switched to become multiple job holder sin 2014.
Employment decisions about multiple job holding, either permanently or temporarily, are closely related to wage or income issues in the main job. According to Shishko Rostker (1976), the labor supply becomes more elastic to wage changes if individuals decide to have multiple jobs due to the constrained hours in their main job, where the income they receive from their main job may be insufficient to meet their needs. Changes in wages in the main job will also alter the required reservation wage to make individuals interested in having multiple jobs. If their income from their main job increases, individuals with multiple jobs in the previous period have a lower tendency to have multiple jobs in the next period (i.e., their multiple job holding is temporary). However,
Table 1. Number of Single Job Holders and Multiple Job Holders in 2014 along with their
Initial Status in the 2007 Survey
Year 2014
Total
Single Job Holder
Multiple Job Holder
Year 2007
Single Job Holder
Multiple Job Holder
Source: Author’s computation using data from IFLS 2007 and 2014
Journal of Indonesian Economy and Business, Vol. 33, No. 1, 2018 5
there are two possibilities that cause the Kimmel (1998) to analyze the effect of wage tendency for multiple job holding to become
increases on the multiple job decision. Their
fixed or even increased (despite an income
model views individuals as optimizing agents
increase from the main job). First, the increase in
with the goal of maximizing utility, or the level
income is still unable to meet their needs.
of satisfaction from consuming goods, services,
Second, the motive for having multiple jobs is
or leisure, who are confronted with budget and
not a financial motive.
time constraints. The available time can be allocated either to time in the labor market or to
3. Research Objective
work that generates income and satisfaction, as
Based on the above description, this research
well as time at home or leisure resulting in
will use IFLS data from 2007 and 2014 to
satisfaction but not income.
investigate whether or not an income increase in
Taking into account that the hours offered on
the primary job affects the multiple job decision
different jobs may not be the same, the hours
in 2014, controlling for the multiple job holding
worked on the main job, h 1 , working hours on
status in 2007. Estimations are conducted using
the second jobs, h 2 , and (time spent on) leisure,
logit estimation. For the robustness check, we
L, enter into utility functions separately. The
also perform a multinomial regression, to total utility can be written as follows: account for any possible changes in the job holding status between 2007 and 2014.
= ( , ℎ , ℎ , ) (1)
where C is a combination of consumer goods.
4. Benefits of Research
The consumption value is usually confronted
By analyzing the effect of a wage increase on
with budget constraints whose value is equal to
individuals’ decisions to have multiple jobs, we
the wage income and non-wage income of
expect to identify the underlying motives for
individuals. This can be represented as follows:
having multiple jobs. For individuals with low incomes, it is widely believed that multiple job
ℎ+ ℎ + (2)
holding is more of a necessity than an option. As
where w i is the average wage received from one
for more financially stable individuals, multiple
hour working at job i, so w i h i is the wage income
job holding can be used as an alternative path for
from work i, and Y is the non-wage income. The
developing and enriching their skills, exploring
wage income from work is confronted with time
alternative career paths and pursuing the constraints, where the number of hours available possibility of entrepreneurial activities through
for each worker is limited:
entrepreneurship. Whether or not such assump- tions are true, become an empirical issue. We
= ℎ + ℎ + (3)
argue that the answer will be useful for where T is the time constraint (hours constraint) developing a policy to reduce the negative
which shows the maximum number of hours in a
consequences of multiple job holding.
day,which is 24 hours. Graphically, this can be described by the indifference curve and the
LITERATURE REVIEW
budget constraint. The indifference curve is a
1. Conceptual Framework
curve that describes the combination of income
In this section, we present the conceptual
and leisure that an individual can accept to
framework developed by Smith Conway and
maintain their utility to some degree. The budget
6 Jou urnal of Indon nesian Econo omy and Busin ness
Wijayanti an d Adrison
constrain nt describes the combin nation of go oods
wag ge of w 1 if heshe can n spend h 1 + h 2 hours
and serv vices that w workers can get from t their
wor rking at thei ir main job. The I 3 curv ve shows
income. Note that the slope of the bu dget
the lowest utilit ty level that the same wo orker can
constrain nt is the sam e as the inco ome level.
reac ch if the w worker can o only spend h 1 hours
Subs stituting the above cons straints into the
atw work on thei irmain job. This is du ue to the
utility fu unction for
C and L, w will result in n the
stip pulation of th he number o of working h hours set
followin ng utility-max ximizing pro oblem:
by t the company y so that wor rkers cannot work for H= =h 1 +h 2 . Th he figure also o shows that t workers
max x ,
(ℎ + ℎ+ , ℎ , ℎ , −
can n still reach a higher utilit ty level than I 3 , which
ℎ− −ℎ)
is d denoted by cu urve I 2 , if the e worker is w willing to
Ther re are two typ pes of multip ple job holdi ings,
do a a second job b even though h the job off fers lower
i.e., con nstrained a and non-con nstrained. In na ave rage hourly wages. The e decision to o conduct constrain ned multiple e job holding g, the qualit ty of
mul ltiple job ho oldings depe ends on wh ether the
the seco ond job is u usually lower r than the m main
wag ge-offer in the secon d job exce eeds the
job. Con nversely, in the uncons trained mult tiple
rese ervation wag ge. The rese ervation wag ge in the
job hold ding, the qu uality of the e second jo b is
seco ond job is sh hown by the lowest utilit ty level I 3
equal to or better tha an the main j job. We can n use
whi ich is the intersectio on of the primary
the utilit ty-maximizin ng problem as written in n (4)
emp ployment wa age and h 1 working hou w urs. If the to descri ibe both type es of multiple e job holding g. wag ge-offer exc ceeds the re eservation w wage, the
wor rker will tak ke a second job that res sults in a
1.1. Con nstrained Mu ultiple Job Ho olding
grea ater utility.
Figure 1 1 illustrates the concep pt of the h ours
For compar rison, Figure e 2 below sh hows the
constrain ned model. This figur re shows t three
type e of worker w who chooses s not to have e multiple
levels of f utility a wo orker can ach hieve, depend ding
jobs s. This is b because the wage earne ed in the
on the c conditions of f hisher job b. In this fig gure,
prim mary job m aximizes the e worker's u utility or
curve I shows the e highest lev vel of utilit ty a
bec ause the wa age-offer in the second job does
worker can achieve e with an a average (hou urly)
not exceed the r reservation w wage.
Figu ure 1 Utility M Maximizing De ecision of a C Constrained Mu ultiple Job Ho olding
Journal o of Indonesian n Economy an nd Business, V Vol. 33, No. 1 , 2018
Source: Ado opted from Av verett (2001)
Figure 2 Utility Max ximizing Deci ision of a Con nstrained Non Multiple Job Holding
Source: A Adopted from m Smith Conw way and Kimm mel (1998)
In es ssence, if th he worker is s constrained d by
disu utility of on ne hour work king at a se econd job
hisher w working hour rs in their ma ain job then h 1 is
(the e utility of a second job r reduces the u utility lost
no longe er a choice v variable and the only wa ay to
from m forgone le eisure). Equa ation (6) is a a general
increase the working g hours is by having a sec cond
con ndition betwe een the reser rvation wage e and the
job. This s is an examp ple of a cons strained mult tiple
labo or market w wage. The i individual w will offer
job hold ding in which h workers w will earn a lo ower
hou urs of work k in the se econd job u until the
income t than a single e job holder t that has the s same
mar rginal disutil lity of an add ditional hour r working
basic qu ualifications ( (and hence th he same ave rage
in th he second jo ob, divided b by the margin nal utility
wage of f w 1 ) if he can work f for h 1 +h 2 ho ours.
of i ncome, equa als the (negat tive) wage pa aid in the
Based o on the hour rs constrain ned models, the
seco ond job ((U 2 -U L ))U C =- w 2 ).
second job is infe erior, in wh hich this w work
The solution n for the opti imal hours w worked in
provides s a lower ave erage (hourly y) wage w 2 than
the second job w will be as fol llows:
the main n job.
ℎ=ℎ( ,+( −
Subs stituting the time constr raint ofthe m main
job h 1 =
into the utility-maxi imizing prob blem
whe ere Y + (w 1 - w 2 )h 1 is the e 'linearized' intercept
of Equa ation (4), w will produce e the follow wing
of the new bu udget line se egment. The e letter c
equation n:
writ tten above si ignifies this function is a a multiple
job holding fu function for r workers w max who are x ( + + ℎ+, , , ℎ , − con nstrained by w working hou urs in their m − main job. −ℎ)
and ge enerate the e following g optimiza ation
1.2. . Non Constr rained Multip ple Job Hold ding
relations ships:
Figu ure 3 below illustrates t the concept o of a non-
( − )⁄ = =−
hou urs constrain ned multiple e job holdin g, where ther re is no hou ur constraint on the main n job, so
where U U 2 is the par rtial derivativ ve of the ut tility
wor rkers can wo ork longer ho ours at that jo ob if they
with res spect to h 2 . Then, U 2 -U U L is a marg ginal
wis h. Taking a a second job b will be do ne if the
8 Jou urnal of Indon nesian Econo omy and Busin ness
Wijayanti an d Adrison
wage pa aid for hat second job b can yield the
hete erogenous ch haracteristic s of the wo ork, there
worker a autility of at least I 1 . In c ontrast to Fig gure
may y be other re easons that e encourage in ndividuals
1, this t type of wor rker has an hourly ave rage
to d do both jobs . Thus, we c can observe the work
wage of f w 2 offered d by thesec ond job, w hich
hou ur offer eq quation for both jobs as the
should b be higher tha an the averag ge (hourly) w wage
foll lowing:
in the m main job (w w 1 ). Thus, th he multiple job
ℎ= ℎ( , , ), for r i = 1, 2
holder w will earn mor re relative in ncome comp ared to a sing gle job holde er. This may y occur when n the
Wh here ℎ de enotes the unconstraine ed labor
quality o of the second d job exceed ds the qualit ty of
sup ply function n. Comparat tive statics for such
the main n job (in this s case, in its s income-rel lated
mod dels, based o on standard a assumptions about the
dimensio ons).
util ity function ns, show th hat ℎ
0 for , with an ambiguous sign when = . The assu umption that t leisure is a a normal goo od shows
ℎ 0.
1.3. . Multiple J Job Holdin ng Permane ently or
Temporari ly The e permanent t or tempor rary phenom menon of
mul ltiple job ho olding can be e explained i in Figure
4 be elow. This im mage is a fu urther develo opment of the blend of Fig gures 1 and 2 of the co nstrained mul ltiple job hol lding types.
In the figur re above, cur rve I shows the level
of u utility of a w worker when multiple job b holding
Figure 3 Utility Max ximizing Dec cision of a N Non-
occ urs due to t the working hours const traints in
Constrained d Multiple Job Holding
the primary job b. This type of worker can only
Source: Adopt S ted from Aver rett (2001)
spen nd h 1 hours atwork at th heir primary job with
The utility-maxim mization pro oblem writte en in
an average (hou urly) wage of w 1 so tha at hisher
Equation n (4), produc ces the optim mization relat tion-
inco ome is insu fficient to m meet their n needs. To
ship as f follows:
mee et their need ds, workers are willing to do a seco ond job for up to h 2 ho ours even th hough the
( − − )⁄ = − , untuk i = 1, 2
wor rk offers a l ower averag ge (hourly) w wage rate
Equa ation (8) exp plains that th e individual will
w 2 . Curve I' sh hows the ut tility when t the wage
offer ho ours of wo ork to each h job until the
paid d for the m main job incr rease from w w 1 to w 1 '
marginal l disutility o of one hour r worked on n the
(Δ1 w 1 ), allowin ng workers to o get out of f multiple
job (the utility of t the work is reduced by y the
job holding if t the wage in ncreasecan m meet their
utility lo ost from forg gone leisure) ) divided by
nee ds. However r, since the i increase in w wages has
marginal l utility of in ncome, equa als the (negat tive)
not been able t to meet hish herneeds, th e worker
wages p paid on the j ob. In fact, individuals who
mus st keep doin ng multiple j jobs (i.e., p ermanent
want to work with m more work ho ours will alw ways
mul lti job hold ding). Howe ever, an inc crease in
choose t to work in a second job d due to the hig gher
wag ges at their m main job allo ows workers to spend
wages. H However, du ue to the po ossibility of f the
less s time doing g second job bs (h 2 '). The curve I''
Journal o of Indonesian n Economy an nd Business, V Vol. 33, No. 1 , 2018
Figure 4 Uti ility Maximiz zing Decision of a Permanen nt and Tempo orary Multiple Job Holding Source: Autho S or
shows th he highest u utility that c can be achie eved
who o perform multiple jo ob holding. Friesen
when the e wage in the e main job in ncrease from mw 1 '
01) used the e data from the Canadia an Labor
to w 1 '' (Δ Δ1w 2 ). The I I'' curve can a also be achie eved
Sur rvey in June 1997. Estim mates were c onducted
by the i increase inth he main job’ ’s wage dire ectly
by looking at how variati ions in the working
from w 1 to w 1 '' (Δ1w w 3 ). This wa age increase can
hou urs and wag es affect mu ultiple job d decisions.
meet the e needs of w workers, allow wing worker rs to
The e empirical studies re elated to th he target
quit thei ir multiple j job holding. . This condi ition
inco ome model by Krishna an (1990) s show the
enables workers to revert back to a single job
evid dence of a relationship p between e employee
(i.e., the multiple job b holding is t temporary).
inco ome and th he tendency y for mult tiple job hold ding. Using g the Surv vey of Inco ome and
2. Previo ous Empiric cal Studies
Pro gram Partici ipation (SIPP P, wave 2) d data from
Based o n the above theoretical explanation, , the
Feb bruary-April 1984, the re search concl ludes that
four mo otives under rlying the workers hav ving
the tendency to o have multip ple jobs dec creases as
multiple jobs as de escribed in t the introduc ctory
income rece eived from th he main job i increases.
section c can be group ped as follow ws:
Nev vertheless, t the Robinso on and W Wadsworth (20
07) study u using Labor r Force Surv vey data
1. A co onstrained m multiple job holding if f the
from m 1998-2003 3 failed to fi find evidence e that the
under rlying motiv ve is the h hours constr raint
intr roduction of minimum w wages in the U UK had a
mode el, target inc come model l, and main job
sign nificant effe ect on empl oyment dec isions in
insec urity model.
mul ltiple job ho olding. How wever, the m main job’s
2. An u unconstrained d multiple jo ob holding if f the
hou urs will inc crease for m multiple job b holders
under rlying motiv ve is the het erogeneous j jobs
who ose main job bs are not c covered by m minimum
mode el.
wag ges, and the e second jo ob’s hours w will drop
In th his regard, F riesen (2001 1) found that t the
whe en wages in n the second d job are b elow the
constrain ned hours mo odel caused by overtime pay
min nimum wage .
regulatio ons will incr rease the num mber of wor rkers
10 Journal of Indonesian Economy and Business Wijayanti and Adrison
Böheim and Taylor (2004) found that the
variable is positive and significant, suggesting
existence of a permanent employment contract
that multiple job holding takes place permanen-
in the main job - as a proxy for job security - can
tly. Furthermore, they argue that multiple job
reduce the tendency to seek second jobs. The
holding caused by financial shock is difficult to
study was conducted using the British House-
classify as a temporary phenomenon. This is
hold Panel Survey (BHPS) data from 1990-1991.
because workers who do it permanently are low-
Danzer (2011) also showed empirical results for
paid workers who are usually trapped in the
the main job insecurity model using Ukrainian
"low-payno pay" cycle.
Longitudinal Monitoring Survey (ULMS) data from 2003 and 2004. This study concluded that
3. Research Hypotheses
having a second economic activity can be used
Based on the theoretical model above, our
as a coping strategy for smoothing income and
research hypotheses are as follows:
ensuring no work disruption during wage shocks
1. The greater the increase is in income from the
in the main job. Furthermore, Renna and Oaxaca
main job, this will lower the probability of an
(2006) using the Current Population Survey
individual having multiple jobs in the next
(CPS) data from May 1991 found evidence of
period
the heterogeneous model’s motive. They found
2. The greater the increase is in income from the
that some workers have personal preferences for
main job, this will lower the probability of
job differentiation, where they derive different
individuals permanently having multiple jobs,
utility levels from their main job and their
and increase the probability of individuals
second job.
only having multiple jobs temporarily.
An empirical study regarding whether or not multiple job holding is permanent or temporary
METHOD, DATA, AND ANALYSIS
was conducted by Panos et al. (2014). In that research, Panos et al. (2014) used the British
1. The Empirical Model
Household Panel Survey (BHPS) data from
Based on the theoretical model discussed in the
1991-2005 and included a variable to reflect the
previous section, the worker will have different
initial status of multiple job holding in supply functions of multiple job holding based estimating the employment decisions about on the underlying motives. In general, the multiple job holding for the next few periods.
number of working hours desired on a second
They conclude that the coefficient of this job is distributed as follows (Equation 10).
ℎ(, , )if ℎ ≤ ℎ , ℎ ℎ ≤ ℎ
where
ℎ : The number of work hours offered by the worker ℎ : Number of hours requested by a company ℎ : The number of work hours offered by the worker in the main job ℎ : The number of work hours requested by the company in the main job
Journal of Indonesian Economy and Business, Vol. 33, No. 1, 2018 11
Smith Conway and Kimmel (1998) use
effect of a change in income in the primary job
Equation (10) to estimate the behavior of between workers with a single job and those multiple job holding using both a discrete and
with multiple jobs.
continuous dependent variable. They estimate
To account for other contributing factors, we
the decision to have multiple jobs for all workers
use the following set of control variables. First,
using a discrete dependent variable. The the worker's characteristics which consists of the continuous variable was used to estimate the
monthly income from the primary job (as a
number of working hours in the second job for
natural logarithm), a gender dummy (one for
the multiple job holders only. From the working
male worker, zero otherwise), age (in years),
hours (in the second job) equation, it can be
quadratic age, a dummy for primary education
drawn that the probability is h2≥0. If h2> 0 then
(one if the highest level of education is primary
the worker will have multiple jobs, but if h2=0
education, zero otherwise), a dummy for higher
then the worker does not have a second job.
education (one ifthe worker has at least a college
In this study, the focus is on the employee's
education, zero otherwise), and a marital status
decision to have multiple jobs, so that we use a
dummy (one if married, zero otherwise). Second,
discrete dependent variable. We use a logistic
family characteristics which consist of the
regression to determine whether or not a worker
number of household members aged 15-64 who
will have more than one job using the following
worked during the last twelve months (person),
general function:
and the average of the other household member's
( = 1| ) = ( monthly (nominal) income, and the hours spent ) (11)
at their primary job per month (in hours).
with F (.) being a logistic function, X i is the
We use a location dummy (one if urban, zero
vector of factors affecting the decision of the
otherwise), a dummy for the first job employ-
worker to perform multiple job holding, and β is
ment status (one if an employee, zero otherwise)
the parameter vector.
and a job sector dummy (one if in agriculture,
Our sample consists of workers aged 15-65
zero otherwise) as additional control variables.
years in the IFLS 2014 who were also available
As Monk and Hodge (1995) argue, the labor
for IFLS 2007 and have a similar educational
market’s structure is different from urban
attainment in the two surveys. The dependent
structures concerning its wage rates, transpor-
variable equals one if the workers have multiple
tation systems, and the trend with jobs is toward
jobs, and zero otherwise.
part-time. Generally, rural areas have narrow
Our variable of interests consists of three
industrial bases, smaller numbers of entre-
variables. First, the change in monthly income
preneurs and the type of work is self-employed
from the main job between 2007 and 2014 (in
(Hodge, Dunn, Monk, Fitzgerald, 2002).
the nominal term). Second, a dummy variable to
Rural and urban differences in the labor market’s
reflect the multiple job holding status in 2007
structure are also reflected in the different job
(one if the worker had multiple jobs in 2007,
opportunities and job options available, as well
zero otherwise). Third, the interaction of both
as the dissemination of job-related information.
variables (the income change from the main job
In some cases, multiple job holding among
multiplied by the initial multiple job status) on
agricultural households in rural areas arose as a
the primary job (nominal term, as a natural
result of the variability in agricultural incomes
logarithm). The interaction variable reflects the
12 Journal of Indonesian Economy and Business Wijayanti and Adrison
(Mather Scopilliti, 2004; Taylor Little,
consumption, health, education, employment,
assets, migration, and others. Five waves of this
To estimate the transition probability of
survey have been conducted, i.e., in 1993, 1997,
multiple job status between 2007 and 2014, we
2000, 2007, and 2014. In the first survey (1993)
conduct a Multinomial Logit (MNL) regression
the samples covered 13 provinces, namely North
using the following general function:
Sumatra, West Sumatra, South Sumatra, Lampung, DKI Jakarta, West Java, Central Java,
the Special Region of Yogyakarta, East Java,
where F (.) is a multinomial logistic function, X t,
Bali, West Nusa Tenggara, South Kalimantan,
i is the vector of the factors affecting the decision
and South Sulawesi. Although it only included
of the worker to transition from state j at t-1 to
these13 provinces in Indonesia, the IFLS results
state k at time t (permanent or temporary
adequately illustrate 83 of the population of
multiple job holding), and β is the parameter
Indonesia (Strauss, Witoelar, Sikoki, 2016). In
vector.
this study, we used the data from the two most recent IFLS, namely, the IFLS conducted in
As there are two statuses (multiple job
2007 and 2014.
holder and single job holder) in each dataset, we have four job status categories as described in
IFLS data can be used to analyze the proba-
Table 2.
bility of a worker doing multiple jobs, as the following questions (in the employment section
The independent variables used in this model
of Book 3A) show:
are the same as in the first model, except the initial status variables and the interaction
1. Did you worktry to workhelp to earn
variables (i.e., the income change from the main
income for pay for at least 1 hour during the
job multiplied by the initial multiple job status)
past week?
are not included in the estimation model because
2. Did you have an additional job other than
they are self-reflected by the decision variables.
your main job?
3. Which category best describes your main
2. Data
job? Your second job? (Employment status) -
This study uses IFLS data which is a national
(self-employed, self-employed with unpaid
panel survey conducted by the Research and
family workertemporary worker, self-
Development (RAND) Corporation. IFLS is a
employed with permanent worker, govern-
comprehensive survey of many aspects Indone-
ment worker, private worker, casual worker
sian domestic life, that collects data on income,
in agriculture, casual worker not in agricul-
Table 2 Matrix Transition between t-1 and t
t (year 2014) Single Job
Multiple Job
Holder (S)
Holder (M)
Single Job
P (y t =S| y t-1 =S) P (y t =M| y t-1 =S)
t-1
Holder (S)
(year 2007)
Multiple Job
P (y t =S| y t-1 =M) P (y t =M| y t-1 Holder (M) =M)
Source: Author’s classification
Journal of Indonesian Economy and Business, Vol. 33, No. 1, 2018 13
ture, unpaid family worker)
people (77.33) and the multiple job holders
4. What type of occupation do you have for
5,046 people (22.67). From the 2014 survey,
your main job? For your second job?
the single job holders amounted to 21,350 people (75.99) and the multiple job holders
5. What is the total number of hours worked
totaled 6,744 people (24.01).
during the past week at your main job? At your second job?
When estimating the logit and multinomial logit models, the main observations were limited
6. Approximately, including all benefits, how
to the same individuals in the two surveys from
much do you earn from your main job? From
2007 and 2014, and had similar educational
your second job?
attainments in both surveys. The final sample
Information on the other socio-demographic
after cleaning the data amounted to 14,594
characteristics of each respondent, such as the
people, which comprised the single job and
number of household members employed, the
multiple job workers in 2014 along with their
amount of income of other household members,
initial status, whether single or multiple job
educational background, and others is compiled
holders in the previous survey in 2007. This is
with the employment module. From the
summarized in Table 1.
combined dataset, we have 24,175 and 31,539 individuals from 2007 and 2014 respectively. In
3. Descriptive Analysis Results
the process of selecting observation samples, as
The descriptive statistic of the individual charac-
shown in Table 3, the working population in
teristics of workers, the family characteristics of
2007 was 22,829 people, while in 2014 it was
the individual workers, the environmental
29,004 people. The total number of workers
characteristics, and the characteristics of the
aged 15-65 years old was 22,346 people in 2007
labor market can be seen in Table 4 to Table 10.
and 28,294 people in 2014. The next sample
Table 4 presents a descriptive statistic of the
selection process is to select workers with a
observations of the same working individuals
maximum number of 672 working hours per
from the two surveys in 2007 and 2014 and who
month (24 hours x 7 days x 4 weeks). This
havesimilar educational attainments in both
results in a sample consisting of 22,260 people
surveys. Table 5 to Table 10 show theadditional
in 2007 and 28,094 people in 2014. From the
descriptive statistics.
2007 data, the single job holders number17,214
Table 3. Sample Selection of IFLS Data in 2007 and 2014
Year 2007
Year 2014
Total Observations of IFLS Data:
No. Drop Observation if:
1. Does Not Work
2. Age <15 Years and> 65 Years
3. Working Hours> 672 Hours
Total Deleted Observations:
Total Sample Selected for Study:
Total Single Job Holder:
Total Multiple Job Holder:
Source: Author’s computation using data from IFLS 2007 and 2014
14 Journal of Indonesian Economy and Business Wijayanti and Adrison
Table 4 Descriptive Statistics Characteristics of Individual Workers, Family Characteristics of
Individuals Worker, Environmental Characteristics, and Characteristics of the Labor Market
Variable Mean Std. Dev. Min. Max
Multiple Job Holding
Initial Status MJH
∆Income Main Job
Interaction 201,414.6 4,969.450 -11,923.8 2,980.958 Ln(Income Main Job in 2007)
Dummy Gender (1=Male)
Age Square
Dummy Basic Education (1=Elementary School)
Dummy High Education (1=University)
Dummy Marital Status (1=Married)
Number of Household Member Working
Total Income other Household Member
Hours Work on Main Job (per month)
Dummy Main Job Sector (1=Agriculture)
Dummy Main Job Status (1=Paid Employee)
Dummy Location (1=Urban)
Ln(Income Increase Main Job)
Ln(Increase Interaction)
Ln(Income Decrease Main Job)
Ln(Decrease Interaction)
Observation 14,594 Source: Author’s computation using data from IFLS 2007 and 2014
From Table 4, 28.4 of the total workers in
average age of multiple job holders in 2014 is 40
2014 decided to conduct multiple job holding.
years old, and the average working hours per
Approximately 25.1 of our sample have month is 165 hours or 5-6 hours per day. multiple jobs in 2007. The average of the main
We can see that the overall number of male
job income per month between 2007 and 2014 is
workers is almost twice of female workers
Rp1,297,339 with a maximum value of (Table 5). The share of multiple job holders Rp8,103,084 and a minimum value of among the male workers is almost three time of Rp11,923.8. This indicates that there are workers
the share of multiple job holders among the
who experienced an increase in their income, as
female workers (14.46 vs. 5.55). In contrast,
well as some who suffered a decrease, from their
female workers are more likely to have
main work between the two survey periods. Out
permanent single job rather than male workers
of 14,594 individuals there are 10,648 indivi-
(67.9 vs. 52.4). From Table 6, it can be seen
duals who experienced an increase in their
that workers with a secondary education is 50
income, 2,587 people experienced a decreased
of our sample. Workers who remain a single job
income, and the remaining 1,359 people had a
holder is greater than 50 of samples for each
fixed income. The average increase in the main
education level. Based on education level, the
job income was 13.7, while the average
share of permanent multiple job holders from
decline for those who suffered a decreased
samples with primary education is higher than
income from the main job was 12.8. The
Journal of Indonesian Economy and Business, Vol. 33, No. 1, 2018 15
two other groups (14 vs. 9.2 and 9.9). From
the share of workers who remain as single job
Table 7, we can see that the share of permanent
holder in the married workers is less than those
multiple job holders in married workers is twice
of single workers.
of single workers (12 vs. 6). On the contrary,
Table 5. Sample Profiles of Single and Multiple Job Holdersin 2014 with Status in the 2007 Survey
Period Based on Gender
Number of Single-
Number of
Number of
Number of Single-
Gender
Multiple Job
Multiple-Single Job Multiple-Multiple
Total
Single Job Holder
Holder
Holder
Job Holder
Source: Author’s computation using data from IFLS 2007 and 2014
Table 6. Sample Profiles of Single and Multiple Job Holders in 2014 with Status in the 2007 Survey
Period Based on the Highest Education everbeing Attended
Number of
Number of
Number of
Number of
Type of Education
Single-Single Single-Multiple Multiple-Single Multiple-Multiple
Total
Job Holder
Job Holder
Job Holder
Job Holder
Basic Education
Secondary Education
High Education
Source: Author’s computation using data from IFLS 2007 and 2014
Table 7. Sample Profiles of Single and Multiple Job Holders in 2014 with Status in the 2007 Survey
Based on Marital Status
Number of
Number of
Number of
Number of
Marital Status Single-Single
Single-Multiple Multiple-Single
Multiple-Multiple
Total
Job Holder
Job Holder
Job Holder
Job Holder
Not Married
Source: Author’s computation using data from IFLS 2007 and 2014
16 Journal of Indonesian Economy and Business Wijayanti and Adrison
From Table 8, it can be seen that self-
workers who remain a single job holder is higher
employed workers have a higher share of having
than self-employed workers. From Table 9, the
a permanent multiple job compare paid workers
share of permanent multiple job holders in
and unpaid family workers (14 vs. 9 and 7
agriculture is almost twice those in other sector
respectively). The same pattern can also be seen
(17 vs. 9). The share of permanent multiple
for those who switched from single job holders
job holders in rural is 16.7, which is almost the
to multiple job holders (19 vs. 15 and 12).
same to the share of permanent job holders in
The share of paid workers and unpaid family
agriculture sector (Table 10).
Table 8 Sample Profiles of Single and Multiple Job Holder Workers in 2014 and their Status in the
2007 Survey Period Based on Main Employment Status
Number of
Number of
Number of
Number of
Main Job Status
Single-Single
Single-Multiple Multiple-Single Multiple-Multiple
Total
Job Holder
Job Holder
Job Holder
Job Holder
Self Employed
Paid Worker
Unpaid Family
Source: Author’s computation using data from IFLS 2007 and 2014 Table 9 Sample Profiles of Single and Multiple Job Holder Workers in 2014 and their Status in the
2007 Survey Period Based on Main Job Sector
Number of
Number of
Number of
Number of
Main Job
Sector
Single-Single Single-Multiple Multiple-Single Multiple-Multiple
Total
Job Holder
Job Holder
Job Holder
Job Holder
Agriculture Sector
Non Agriculture
Source: Author’s computation using data from IFLS 2007 and 2014 Table 10. Sample Profiles of Single and Multiple Job Holder Workers in 2014 and their Status in the
2007 Survey Period Based on Residence
Number of
Number of
Number of
Number of
Multiple-Single Multiple-Multiple
Total
Job Holder
Job Holder
Job Holder
Job Holder
Source: Author’s computation using data from IFLS 2007 and 2014
Journal of Indonesian Economy and Business, Vol. 33, No. 1, 2018 17
4. Estimated Results
The estimation results of the wage effect on
4.1 Logit Estimation Results of Multiple Job
employees’ decisions to perform multiple job
Holding Decision
holding based on their initial status of MJH for workers aged 15-65 years using a logit regression can be seen in Table 11 below.
Table 11. Logit Estimation Results of Multiple Job Holding Decision
Model Logit (1=Multiple Job Holding) Model 1
Sample with Sample with
Full
Sample with
Sample with
∆Income Main Job
Initial MJH Status
Ln(Income Increase
from the Main Job)
Ln(Income Increase) x
Initial MJH Status
Ln(Income Decrease
from the Main Job)
Ln(Income Decrease) x
Initial MJH Status
Ln(Income from the
-0.01382 -0.00741 -0.02385 -0.01404
-0.01015 -0.16403
Main Job in 2007)
Dummy Gender
(0.003) (0.004) (0.010) (0.003) (0.003) (0.038) Age Square
Dummy Basic Education
-0.01882 -0.02572 -0.03322 -0.01885
Dummy High Education
Dummy Marital Status
Number of Household
Members Working
Total Income Other
-0.00004 -0.00003 -0.00015 -0.00004 -0.00002 -0.00019
Household Members
Hours Worked in
-0.00042 -0.00044 -0.00039 -0.00043
-0.00035 -0.00171
the Main Job (month)
Dummy Main Job
18 Journal of Indonesian Economy and Business Wijayanti and Adrison
Model Logit (1=Multiple Job Holding) Model 1
Sample with Sample with
Full
Sample with
Sample with
(1=Agriculture) Dummy Main Job
-0.05689 -0.06950 -0.01528 -0.05693
(1=Paid Worker) Dummy Location
-0.02852 -0.03115 -0.21222 -0.02881
N 11,714 8,787 2,587 11,714 8,787 2,587 Source: Author’s computation using data from IFLS 2007 and 2014
p<0.01, p<0.05, p<0.1 The number in brackets () indicates the standard error
Based on the above table, using the full
holding is positive and statistically significant.
sample, those who have multiple jobs in 2007
This implies that for workers who had multiple
have a higher probability to have multiple jobs
job in 2007, the higher the percentage decrease
in 2014. This indicates that multiple job holding
in their income from their primary job, the
takes place permanently. However, we do not
higher is the probability to remain as a multiple
find a significant impact of the change in the
job holders in 2014, indicating permanent
income from the main job on the probability of
phenomenon.Those who have higher income
having multiple jobs in 2014. This is probably
(from the primary job) in 2007 is less likely to
because there are workers who experienced an
have multiple job in 2014 in five out of six
increase in their income while some others
specifications.
experienced a decrease in their income, which
With regard to gender, we found that male
may result in insignificant parameter. We then
workers have a higher probability to have
split the sample for those who experienced an
multiple jobs in 2014. Based on workers’ age,
increase in their income and those who the probability of having multiple jobs in 2014 experience a decrease in their income. As the
follows an inverted U-shaped curve, indicated by
result, we have 8,787 observations from those
a positive parameter of variable age and negative
with income increase and 2,587 observations
parameter of variable age-squared. For education
from those with income decrease.
variables, we found interesting results.
After splitting the sample, we found that the
Specifically, workers with basic education have
higher the percentage of income increase, the
a lower probability to have multiple jobs in
lower is the probability to have multiple jobs in
2014, while those with university education have
2014. For workers who experienced a decrease
a higher probability to have multiple jobs. We
in income from their primary job, we found that
argue that – other things being constant -
the higher the income decrease, the higher is the