International Journal of Academic Research in Business and Social Sciences

search-icon

Trade Liberalization and Labor Demand in Indonesia

Open access
Trade liberalization agreement creates great opportunities to enhance economic among participating countries. Trade liberalization would inevitably affect the factors of production within countries. The aim of the study is to analyze the impact of trade liberalization on labor demand in manufacturing industries in Indonesia. This study employs industrial manufacturing firm-level data over the period 2008-2013 and was estimated using panel data regression analysis, the Fixed Effect Method. The results indicate that tariff rates, value-added, imports of raw materials, and export significantly affect the labor demand. Furthermore, labor wages have negatively affected the labor demand of Indonesian manufacturing industry.
Arifin, S. (2007). Int' l Cooperation Trade: Opportunity and Barrier for Indonesia. Jakarta: Gramedia.
Badan Pusat Statistik (BPS). (2012). Labor Concept. Jakarta: BPS.
Badan Pusat Statistik (BPS). (2012) Industry Manufacture. Jakarta: BPS.
Badan Pusat Statistik (BPS). (2013) CPI and Indonesia's Monthly Inflation. Jakarta: BPS.
Borjas, G. J. (2016). Labor Economics 7th Edition. New York: McGraw-Hill Education.
Bourguignon, F., & Goh, Chor-ching. (2016). Trade and Labor Market Vulnerability in Indonesia, Korea, and Thailand. Jakarta: World Bank.
Carbaugh, R. J. (2008). International Economics 11th Edition. USA: Thomson Higher Education.
Chand, S. (1999). Trade liberalization and productivity growth: Time-series evidence from Australian manufacturing. Journal of Economic Literature, 75, 28–36.
Gaddis, I., & Pieters. J. (2014). The gendered labor market impacts of trade liberalization: Evidence from Brazil. World Bank Policy Research Working Paper. No. 7095. Washington D.C.: World Bank.
Gujarati, D. N. (2004). Basic Econometrics 4th Edition. New York: McGraw-Hill.
Hasan, R., Mehta, D., Ranjan, P., & Ahsan, R. N. (2012). Trade liberalization and unemployment: Theory and evidence from India. Journal of Development Economics, 97(2), 269-280.
Iyer, K. G., Rambaldi, A. N., & Tang, K. K. (2009). How trade and foreign investment affect the growth of a small but not so open economy: Australia? Applied Economics. 41, 1525–1532.
Krugman, P. R., Obstfeld, M., & Marc, J. M. (2012). International Economics Theory and Policy 9th Edition. England: Pearson Education Limited.
Kyophilavong, P. (2013). The effects of AFTA on macroeconomic variables and poverty: Evidence of Laos. JEL Classification. Laos: Faculty of Economics and Business Management, National University of Laos.
Liyanaarachchi, T. S., Naranpanawa, A., & Bandara, J. S. (2016). Impact of trade liberalization on labour market and poverty in Sri Lanka: An integrated macro-micro modelling approach. Economic Modelling. 59, 102-115.
Mayana, R. F. (2004). Protection of Industrial Design in Indonesia. Jakarta: Grasindo.
McCaig, B. (2011). Exporting out of poverty: Provincial poverty in Vietnam and U.S. market access. Journal of International Economics. 85(1), 102–113.
Njikam, O. (2016). Trade liberalization, labor market regulations and labor demand in Cameroon. International Review of Economics and Finance, 1–17.
Nocke, V., & Yeaple, S. (2008). An Assignment Theory of Foreign Direct Investment. Review of Economic Studies. 75(2), 529-557.
Organization for Economic Co-operation and Development (OECD). (2005). National Accounts of OECD Countries. Paris: OECD.
Pugel, T. A. (2012). International Economics 15th Edition. New York: The McGraw-Hill Companies, Inc.
Rodrik, D. (1997). Has Globalization Gone Too Far?. Washington D.C.: Institute of International Economics.
Salvatore, D. (2007). International Economics 9th Edition. USA: John Wiley & Sons, Inc.
Samuelson, P. A., & Nordhaus, W. D. (2009). Economics. New York: The McGraw-Hill Companies, Inc.
Todaro, M. P., & Smith, S. C. (2003). Development Economics in The Third World 8th Edition. Jakarta: Erlangga.
Topalova, P. (2010). Factor immobility and regional impacts of trade liberalization: Evidence on Poverty from India. American Economic Journal: Applied Economics. 2(4), 1–41.
World Bank. (2016). World Development Indicators. Washington D.C.: World Bank.
World Integrated Trade Solutions (WITS). (2010). Types of Tariffs. Washington D.C.: World Bank.
In-Text Citation: (Handoyo et al., 2020)
To Cite this Article: Handoyo, R. D., Rabbanisyah, F., Ridzuan, A. R., & Razak, M. I. M. (2020). Trade Liberalization and Labor Demand in Indonesia. International Journal of Academic Research in Business and Social Sciences, 10(5), 753–761.