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The economics of Kretek rolling in Indonesia (English)

This report identifies the socioeconomic and labor market characteristics of kretek workers and their households from two large kretek producing districts. The analysis in this report is based on data collected from a sample survey of 720 kretek workers’ households from two large kretek producing districts, Kudus and Malang. The details of the survey methodology are provided in appendix A. The purposive selection of sample districts is driven by a high degree of regional concentration of kretek factories. Based on the annual Survey of Industry (SI), 40 percent of Indonesian kretek workers are in three districts only, Kudus (21.4 percent), Kediri (10.2 percent), and Malang (8.6 percent) (World Bank, 2017a). This report consists of six sections, including this introduction. The next section, section two, describes the socioeconomic profile of kretek workers and their households. In section three, the labor market characteristics of kretek workers are discussed. The livelihood status of kretek workers are covered in section four. Section five presents the simulated results of the impacts of cigarette excise tax policy reform on the livelihood of kretek workers. Finally, section six concludes with the summary of findings and policy recommendations.


  • Author

    Nargis,Nigar, Sahadewo,Gumilang Aryo, Araujo,Edson Correia, Harimurti,Pandu, Drope, Jeffrey, Li, Qing, Durazo,Josefine, Kartaadipoetra,Firman Witoelar, Sikoki,Bondan Supraptilah

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    The economics of Kretek rolling in Indonesia

  • Keywords

    demand for tobacco product; junior high school education; senior high school education; price of tobacco products; price elasticity of demand; elasticity of labor supply; female labor force participation; alternative sources of employment; calculation of household income; wage income; labor market outcome; years of schooling; Social Safety Nets; change in poverty; labor market characteristic; reduction in employment; determinants of poverty; loss of job; excise tax system; source of employment; care of child; gross domestic product; national poverty line; number of workers; reduction in production; social protection program; temporary income support; cash transfer program; food processing industry; labor market participation; scale production; labor supply decisions; female labor supply; scale of production; amount of loan; annual cigarette consumption; loss of employment; elasticity of output; tax policy change; lack of skill; subsidized health insurance; health care cost; long term planning; poor health status; cost of employment; division of labor; tobacco control measures; proportion of income; reducing tobacco use; cost of production; international nongovernmental organizations; place of residence; primarily due; income generating activity; standard of living; confidentiality of data; flexible work hour; sale of products; purchasing power parity; labor income; farm activity; farm activities; household resource; tax increase; income loss; tobacco manufacturing; job loss; gross margin; tobacco tax; disease burden; smoking prevalence; income source; poverty status; contract worker; medium firms; total wage; outstanding loan; summary statistic; farm revenue; additional revenue; cash assistance; household level; severance pay; annual revenue; smoking population; casual worker; alternative livelihood; retail price; micro firms; sample cluster; firm size; affected households; Elementary Education; household consumption; cigarette tax; Tax Reform; win-win policy; tax rate; Health cost; average household; marginal effect; monthly payment; high wage; focus group; paid maternity; paid holiday; sick leave; average age; employment opportunities; employment opportunity; sample survey; household asset; supplementary income; health payments; tobacco industry; household size; nonfarm enterprise; household head; job security; significant factor; older adult; food insecurity; laid-off worker; household survey; excise tariff; monthly wage; annual wage; government support; socioeconomic status; liquidity constraint; tobacco company; daily payment; production line; daily wage; unwritten contract; education level; hourly wage; heavily dependent; income household; work status; minor children; staple food; worker household; alternative employment; independent variable; full employment; Cardiovascular Disease; raw material; lung disease; income growth; sample selection; good health; smoking initiation; enumeration area; price gap; premature death; global target; qualitative dimension; vulnerable group; policy scenario; retail sale; Child care; standard error; tax structure; tobacco sector; cigarette price; money lender; print shop; wage laborer; female work; asian study; commercial bank; farm household; driving force; secure employment; production volume; phone shop; job opportunity; agricultural activity; job opportunities; schooling year; wage worker; skill requirement; market opportunity; potential smokers; construction sector; vulnerable segment; textile industry; safety equipment; food production; female workers; female head; income year; paying job; household appliance; young child; individual poverty; poverty headcount; household earning; benefits benefit; production cost; significant correlation; food sale; health condition; household sector; Animal Husbandry; older worker; heavy reliance; income account; fitted value; Real estate; wage employment; irregular income; negative correlation; income uncertainty; married woman; job market



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Nargis,Nigar Sahadewo,Gumilang Aryo Araujo,Edson Correia Harimurti,Pandu Drope, Jeffrey Li, Qing Durazo,Josefine Kartaadipoetra,Firman Witoelar Sikoki,Bondan Supraptilah

The economics of Kretek rolling in Indonesia (English). Health, nutrition, and population global practice Washington, D.C. : World Bank Group.