Import competition and local labor markets: the case of Indonesia

Fina Sri Agustina

Abstract

This paper analyzes the effects of import competition on Indonesian local labor markets in term of manufacturing employment share, non-manufacturing employment share, unemployment rate, and wages. A rapid increase of globalization has caused many countries including Indonesia experienced a significant increase in imports, which lead to a tougher import competition. Using data of imports and 430 districts in Indonesia in the period of 2007-2013, we found that import competition has negatively affected manufacturing employment share, non-manufacturing employment share, and wages. It also increased unemployment. In addition, the highest impact was mainly driven by imports of consumption goods

Keywords

import competition, local labor market, Indonesia

References

Amiti, M., & Cameron, L. (2012). Trade Liberalization and the Wage Skill Premium: Evidence from Indonesia. Journal of International Economics, 87, 277-287.

Amiti, M., & Konings, J. (2007). Trade Liberalization, Intermediate Inputs, and Productivity: Evidence from Indonesia. The American Economic Review, 97, 1611–1638.

Andhini, A. (2012). Analisis Pengaruh Penetrasi Produk Cina ke Pasar Domestik indonesia Terhadap Pertumbuhan Industri Manufaktur. (Master Thesis), Universitas Indonesia, Faculty of Economics and Business, Depok, Indonesia.

Autor, D. H., Dorn, D., & Hanson, G. H. (2013). The China Syndrome: Local Labor Market Effects of Import Competition in the United States. The American Economic Review, 103, 2121-2168.

Bahmani-Oskooee, M., & Chakrabarti, A. (2003). Import competition, employment and wages in U.S. manufacturing. Journal of Policy modeling, 25, 869-880.

Balsvik, R., Jensen, S., & Salvanes, K. G. (2014). Made in China, sold in Norway : Local labor market effects of an import shock. Journal of Public Economics, 127, 137-144.

Bertrand, M. (2004). From the Invisible Handshake to the Invisible Hand? How Import Competition Changes the Employment Relationship. Journal of labor Economics, 22, 723-765.

Caves, R. E., & Porter, M. E. (1978). Market Structure, Oligopoly, and Stability of Market Shares. The Journal of Industrial Economics, 26, 289-313.

Cinthya, Caamal-Olveraa, & Rangel-Gonzalez, E. (2015). Measuring the impact of the Chinese competition on the Mexican Labor Market: 1990-2013. North American Journal of Economics and Finance, 34, 351-363.

Dauth, W., Findeisen, S., & Suedekum, J. (2014). The rise of the East and the Far East: German labor markets and trade integration. Düsseldorf Institute for Competition Economics (DICE). DICE Discussion Paper, No. 127.

Donoso, V., Martin, V., & Minondo, A. (2014). Do Differences in the Exposure to Chinese Imports Lead to Differences in Local Labour Market Outcomes? An Analysis for Spanish Provinces. Regional Studies, 49, 1746-1764.

Dutt, P., Mitra, D., & Ranjan, P. (2009). International trade and unemployment: Theory and cross-national evidence. Journal of International Economics, 78, 32–44.

Feenstra, R. C., & Hanson, G. H. (1997). Foreign Direct Investment and Relative Wages: Evidence of Mexico's Maquiladoras. Journal of International Economics, 42, 371–393.

Goldar, B., & Aggarwal, S. C. (2012). Informalization of Industrial labor in India: Effects of Labor Market Rigidities and import competition. The Developing Economies, 50, 141-169.

Greenland, A., & Lopresti, J. (2016). Import exposure and human capital adjustment: evidence from the US. Journal of International economics, 100, 50-60.

Hasan, R., Mitra, D., Ranjan, P., & Ahsan, R. N. (2012). Trade liberalization and unemployment: Theory and evidence from India. Journal of Development Economics, 97, 269–280.

Kasaharaa, H., Liang, Y., & Rodrigue, J. (2016). Does importing intermediates increase the demand for skilled workers? Plant-level evidence from Indonesia. Journal of International Economics, 102, 242-261.

Kis-Katos, K., & Sparrow, R. (2015). Poverty, labor markets and trade liberalization in Indonesia. Journal of Development Economics, 117, 94-106.

Lacovone, L., Rauch, F., & Winters, A. (2013). Trade as an engine of creative destruction: Mexican experience with Chinese competition. Journal of International economics, 89, 379-392.

Lazear, E. P., Shaw, K. L., & Stanton, C. (2014). Making Do with Less: Working Harder During Recessions. Stanford University Graduate School of Business Research Paper,14-16. Social Sciences Research Network, Rochester, NY, USA.

Mendez, O. (2015). The efeect of Chinese import competition on Mexican local labor markets. North American Journal of Economics and Finance, 34, 364-380.

Olper, A., Pacca, L., & Curzi, D. (2014). Trade, import competition and productivity growth in the food industry. Food Policy, 49, 71-83.

Pavcnik, N. (2003). What Explains Skill Upgrading in Less Developed Countries? Journal of Development Economics, 71, 311-328.

Sjöholm, F. (1999). Exports, Imports and Productivity: Results from Indonesian Establishment Data. World Development, 27, 705-715.

Soderbom, M. (2009). Applied Econometrics, Lecture 2: Instrumental Variables, 2SLS and GMM. Retrieved from http://www.soderbom.net/lec2n_final.pdf

Tomiura, E. (2003). The impact of import competition on Japanese manufacturing employment. Journal of The Japanese and International Economies, 17, 118-133.

Article Metrics

Metrics Loading ...

Metrics powered by PLOS ALM


Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Economic Journal of Emerging Markets (EJEM)
ISSN 2086-3128 (print), ISSN 2502-180X (online)
Published by:
Center for Economic Studies, Department of Economics,
Universitas Islam Indonesia, Indonesia.

Creative Commons License
EJEM by http://journal.uii.ac.id/JEP/ is licensed under a Creative Commons Attribution 4.0 International License.