The height premium in Indonesia

•An additional 10 cm in physical stature is associated with a 8% and 13% earnings increase for men and women, respectively.•Workers' productivity does not fully explain the height premium.•We provide evidence that is suggestive of discrimination based on customers' preferences for tallness.

Analyzing the Indonesian Family Life Survey for the year 2007, this paper estimates that a 10 cm increase in physical stature is associated with an increase in earnings of 7.5% for men and 13.0% for women, even after controlling for an extensive set of productivity variables. When the height premium is estimated by sector, it is 12.3% for self-employed men and 18.0% for self-employed women; a height premium of 11.1% is also estimated for women in the private sector. In the public sector, however, the height premium estimate is not statistically significant for either men or women. This paper provides further evidence of discrimination based on customers' preferences for tall workers.