ABSTRAKMayoritas studi mengenai dampak upah minimum terhadap employment menghasilkan dampak negatif upah minimum terhadap employment di sektor formal. Namun, ada indikasi hasil studi tersebut bias karena menganggap bahwa pasar tenaga kerja antar unit observasi saling bebas, padahal pasar tenaga kerja antar unit observasi saling tergantung satu sama lain. Studi ini bertujuan untuk mengestimasi dampak upah minimum terhadap employment dengan mempertimbangkan bahwa antar unit observasi saling tergantung satu sama lain. Dengan menggunakan pendekatan difference in spatial difference studi ini mengestimasi dampak upah minimum terhadap employment dengan menggunakan data Sakernas Tahun 2010-2015 di Pulau Jawa. Hasil estimasi menunjukkan adanya dampak positif kenaikan upah minimum terhadap employment di sektor formal dan dampak negative di sektor informal. Kenaikan 100 upah minimum riil dapat meningkatkan employment di sektor formal sebesar 0,41-0,47, dan mengurangi employment di sektor informal sebesar 0,22-0,35 cateris paribus.

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ABSTRACTMost studies on the impact of minimum wages on employment resulted in a negative impact of minimum wages on employment in the formal sector. However, there are indications of bias because the results of these studies assume that the labor market between observation units are independent, whereas the labor market between observation units are dependent on each other. This study aims to estimate the impact of minimum wages on employment considering that between observation units are dependent on each other. Using a difference in spatial difference this study estimate the impact of minimum wages on employment using data Sakernas year 2010 2015 in Java. The estimation results a positive impact of the increase in the minimum wage on employment in the formal sector and negatif impact on employment in the informal sector. 100 increase in the real minimum wage is assosiate with approximately a 0.41 0.47 increase in employment in the formal and decrease employment in informal sector approximately 0.22 0.35.