Do Workers with Digital Competencies Earn Higher Wages? Evidence from the Indonesian Labor Market
Keywords:
Digital Skill, Wage, Labor, SAKERNAS, Indonesia
Abstract
This study examines the impact of digital skills on workers’ wages in Indonesia using microdata from the 2024 National Labor Force Survey (SAKERNAS) and applying Ordinary Least Squares (OLS) methods. The results reveal a significant digital skill premium. The workers using the internet, digital technologies, or employed in digital-intensive occupations earn higher wages than non-digital workers. The premium is greater among male, formal sector, and mid-generation (Gen X and Millennials) workers, and increases toward the upper wage quantiles. These findings highlight the need for inclusive upskilling and reskilling programs to ensure equitable benefits from digital transformation.
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Acemoglu, D., & Autor, D. (2011). Skills, tasks and technologies: Implications for employment and earnings. In O. Ashenfelter & D. Card (Eds.), Handbook of Labor Economics (Vol. 4B, pp. 1043–1171). Elsevier.
Acemoglu, D., & Restrepo, P. (2020). Robots and jobs: Evidence from us labor markets. Journal of Political Economy, 128(6), 2188–2244. https://doi.org/10.1086/705716
Alekseeva, L., Azar, J., Giné, M., Samila, S., & Taska, B. (2021). The demand for AI skills in the labor market. Labour Economics, 71, 1–60. https://doi.org/10.1016/j.labeco.2021.102002
Arntz, I. Z. A. D. P., Arntz, M., Zierahn, U., Arntz, M., & Zierahn, U. (2019). DISCUSSION PAPER SERIES Digitalization and the Future of Work : Macroeconomic Consequences Digitalization and the Future of Work : Macroeconomic Consequences. 12428
Asian Development Bank. (2014). Technological change, skill demand, and wage inequality in Indonesia. ADB Working Paper Series. Asian Development Bank.
Autor, D. H., Levy, F., & Murnane, R. J. (2003). The skill content of recent technological change: An empirical exploration. Quarterly Journal of Economics, Vol.118(4), pp.1279–1333.
Becker, G. S. (1962). Investment in human capital: A theoretical analysis. Journal of Political Economy, 70(5, Part 2), 9–49
Berman, E., Somanathan, R., & Tan, H. W. (2005). Is skill-biased technological change here yet? Evidence from Indian manufacturing in the 1990s. World Bank Policy Research Working Paper No. 3761.
Chen, Z., Ge, Y., & Lai, H. (2010). Foreign direct investment and wage inequality: Evidence from China. World Development, 39(8), 1322–1332.
Correa, Juan A., Lorca, Miguel., Parro, F. (2017). Capital–Skill Complementarity: Does Capital Composition Matter? The Scandinavian Journal of Economics, 121(1), 89–116. https://doi.org/10.1111/sjoe.12267
Deming, D. J. (2022). Four facts about human capital. Journal of Economic Perspectives, 36(3), 75–102.
Federal Reserve Bank of Atlanta. (2023). Closing the digital skill divide. National Skills Coalition & Federal Reserve Bank of Atlanta. Retrieved from https://www.atlantafed.org
Falck, O., Heimisch-Roecker, A., & Wiederhold, S. (2021). Returns to ICT skills. Research Policy, 50(7), 104064. https://doi.org/10.1016/j.respol.2020.104064
Ganju, K. L., Pavlou, P. A., & Raghu, T. S. (2021). IT skills, labor market outcomes, and employment transitions: Evidence from an emerging economy. Information Systems Research, 32(3), 952–970.
Garcia-Lazaro, A., Mendez-Astudillo, J., Lattanzio, S., Larkin, C., & Newnes, L. (2025). The digital skill premium: Evidence from job vacancy data. Economics Letters, 250, 112294.
Hanushek, E. A. (2013). Economic growth in developing countries: The role of human capital. Economics of Education Review, 37, 204–212.
Hidayat, L., & Kadir, K. (2025). Semantic network analysis of digital marketing labor demand in Indonesia. Jurnal Ketenagakerjaan. Ministry of Manpower of the Republic of Indonesia.
Hjort, J., & Poulsen, J. (2019). The arrival of fast internet and employment in Africa. American Economic Review, 109(3), 1032–1079.
Kis-Katos, K., Pieters, J., & Sparrow, R. (2014). Technological change, skill demand, and wage inequality: Evidence from Indonesia. World Development, 57, 93–104.
Kustanto, A. (2024). Can ICT diffusion reduce income inequality for a better life? Evidence from Indonesian provinces. Asian Journal of Applied Economics, 31(1), 1–36.
Liu, Che-Wei., Saldanha, Terence J.V., Mithas, S. (2024). Can Digital Skills Empower Disadvantaged Castes and Women? Evidence From India. Production and Operations Management, 34(4), 760–776. https://doi.org/10.1177/10591478241248749
Lu, W., & Yuan, W. (2024). Digital service trade and the wage income gap between urban and rural residents: Empirical evidence from China. SAGE Open, 14(1).
Matano, A., & Naticchioni, P. (2016). What drives the urban wage premium? Evidence along the wage distribution. Journal of Regional Science, 56(2), 191–209. https://doi.org/10.1111/jors.12235
Mincer, J. (1974). Schooling, experience, and earnings. Columbia University Press.
Nogueira, M. C., & Madaleno, M. (2023). New evidence about skill-biased technological change and gender wage inequality. Economies, 11(7), 193.
OECD. (2025). OECD skills outlook 2025: From skills to labour market opportunities. OECD Publishing. https://doi.org/10.1787/26163cd3-en
Patrinos, H. (2024). Estimating the return to schooling using the Mincer equation. IZA World of Labor. https://doi.org/10.15185/izawol.278.v2
Psacharopoulos, G., & Patrinos, H. A. (2018). Returns to investment in education: A decennial review of the global literature. Education Economics, 26(5), 445–458.
Robert Half. (2026). 2026 salary guide. Robert Half International. Retrieved from https://www.roberthalf.com
Santoso, D., Rahmawati, F., Murniati, M., & Sukoco, I. (2023). The Indonesian digital workforce gaps in 2021–2025. Sustainability, 15(1), 754. https://doi.org/10.3390/su15010754
Wooldridge, J. M. 6th E. (2016). Introductory Econometrics: A Modern Approach (6th Editio). Cengage Learning.
Published
2026-04-22
How to Cite
Nopiah, R., Apriyanti, C., & Barika. (2026). Do Workers with Digital Competencies Earn Higher Wages? Evidence from the Indonesian Labor Market. International Journal of Economics, Business and Innovation Research, 5(03), 576-596. https://doi.org/10.63922/ijebir.v5i03.3234
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