Measuring unemployment in developing countries is not straightforward
due to the presence of a large number of discouraged workers. Including
them into the labor force is sometimes appropriate in order to reflect the true state
of unemployment. However, the decision must be based on careful research. This
study provides a case study of Indonesia, whose decision to include discouraged
workers into its labor force resulted in an artificially high unemployment rates and
disguised the actual post-crisis decline in unemployment in Indonesia. The discouraged
workers can be classified based on their willingness to work. If Indonesia still
wants to include discouraged workers into the labor force, only those willing to
work should be included.