Understanding Gender Differences in Educational Choices and Subsequent Labor Market Oucomes: Evidence from Indonesia

This paper investigates the relative importance of family background characteristics and labor market signals for educational investment decisions, and how do they differ across genders. One thrust of the literature on gender differences in wages and earnings focuses on determining how much of the difference is based on observables such as education, industry, as well as occupations. These observed outcomes, however, are not fundamentally exogenous since they reflect decisions made by families and individuals at important junctures in their youth. Exploiting the longitudinal feature of the Indonesia Family Life Survey (IFLS) and annual rounds of the nationally representative labor survey (the SAKERNAS), this paper examines the relative contribution of family background and local labor market conditions on the trajectory that individuals take from secondary and tertiary education, and into the labor market.