Quantifying the Poverty Paradox: Indonesian Labor Migration

Abstract

The relationship between poverty and labour migration often reflects a paradox: while poverty pushes households to seek opportunities abroad, migration also requires resources that the poorest can't easily afford. This study explores the poverty paradox in the context of Indonesian labour migration by analysing district/city-level panel data from 2021 to 2023. Using fixed effect data panel, the research examines how poverty, Gross Regional Domestic Product (GRDP), male education, female education, and minimum wage influence the number of Indonesian migrant workers. The results reveal a positive but not significant effect of poverty on the number of migrant workers. In contrast, regional income has a strong positive influence, confirming that migration is facilitated by economic capacity. Female education emerges as a significant driver of migration, reflecting the gendered structure of Indonesia’s overseas labour markets, while minimum wages exert a significant negative effect, indicating that improved local wage conditions can partially reduce migration incentives. Overall, the findings highlight with the COVID-19 pandemic and the post-COVID period, Indonesian labour migration is driven less by poverty alone than by the interaction of regional economic capacity, gender-specific human capital, and local labour market conditions. Policy efforts should therefore focus on inclusive regional development, gender-responsive education, and the expansion of decent domestic employment to reduce long-term dependence on international labour migration.