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Trade and employment linkages in Indonesian Agriculture

Author

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  • 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.

Suggested Citation

  • Vanzetti, David & Oktaviani, Rina, 2011. "Trade and employment linkages in Indonesian Agriculture," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100724, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare11:100724
    DOI: 10.22004/ag.econ.100724
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    Cited by:

    1. Ernst, Christoph. & Peters, Ralf., 2012. "Employment dimension of trade liberalization with China : analysis of the case of Indonesia with dynamic social accounting matrix," ILO Working Papers 994681553402676, International Labour Organization.
    2. repec:ilo:ilowps:468155 is not listed on IDEAS

    More about this item

    Keywords

    Agricultural and Food Policy; International Relations/Trade;

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