Routine-Biased Technological Change and the Gender Wage Gap Among Formal Workers in Indonesia

Routine-Biased Technological Change (RBTC) is viewed as reshaping labor markets, yet its implications for gender inequality in developing economies remain underexplored. This study examines these dynamics among formal wage workers in Indonesia from 2001 to 2019. Using stacked first-difference estimations and a dynamic shift-share decomposition, we document three interconnected patterns. First, routine displacement unfolds episodically rather than simultaneously—with relative contraction in routine cognitive jobs (2001–2005), routine manual jobs (2005–2010), and renewed routine cognitive pressures (2015–2019)—a sequence likely shaped by technological change alongside macroeconomic and institutional forces. Second, these adjustments are gender-asymmetric. Women experienced greater exposure to displacement but reallocated substantially toward non-routine interpersonal roles. This occupational upgrading is consistent with both task-based demand shifts associated with technological change and the entry of younger, more educated female cohorts. Third, employment reallocation exerted a narrowing influence on the gender wage gap, particularly in 2005–2010. However, this equalizing channel weakened over time as market valuation (wage exposure) became increasingly unfavorable to female-concentrated occupations, contributing to a renewed widening in 2015–2019. Ultimately, while residual within-task group dynamics dominate the gap’s magnitude, task-based employment and wage channels remain critical in structuring the timing and directional shifts of gender inequality in the formal sector.