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Trade and employment linkages in Indonesian Agriculture

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Author Info

  • Vanzetti, David
  • Oktaviani, Rina

Abstract

Trade negotiators are concerned about the possible negative effects of trade liberalisation on employment in specific sectors. The agricultural sector has characteristics that make it different from industrial or service sectors. These are an informal labour force, low productivity, relative absence of regulations and a tie to land. These characteristics help the sector adjust to trade shocks. In this application, a global computable general equilibrium model is used to determine trade shocks that are passed to a single country general equilibrium model to analyse employment and wage effects for four skills levels in Indonesian agriculture. Employment tends to move with output in the primary agricultural sector where capital-labour substitution is relatively low. However, factor substitution appears to be greater in the processed agricultural sector. The employment effects of trade shocks are quite small, with the possible exception of the highly protected sugar sector. Implications for trade and labour market policies are drawn.

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Bibliographic Info

Paper provided by Australian Agricultural and Resource Economics Society in its series 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia with number 100724.

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Date of creation: 2011
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Handle: RePEc:ags:aare11:100724

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Related research

Keywords: Indonesia; agriculture; trade; employment; Agricultural and Food Policy; International Relations/Trade; F16; Q17;

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Cited by:
  1. Ernst, Christoph & Peters, Ralf, 2012. "Employment dimension of trade liberalization with China [ electronic resource ]: analysis of the case of Indonesia with dynamic social accounting matrix," ILO Working Papers 468155, International Labour Organization.

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