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Does importing intermediates increase the demand for skilled workers? Plant-level evidence from Indonesia

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  • Kasahara, Hiroyuki
  • Liang, Yawen
  • Rodrigue, Joel

Abstract

This paper examines whether starting to import contributes to skill upgrading among Indonesian plants. Our data records the distribution of years of employee schooling in each plant. We examine how starting to import affects the demand for highly educated workers within and across production and non-production occupations categories at the plant level. We estimate a model of importing and skill-biased technological change in which selection into importing arises due to unobservable heterogenous returns from importing. Both instrumental variable regression and marginal treatment effect estimates confirm that importing has substantially increased the relative demand for educated workers within each occupation. In contrast, we do not consistently estimate a significant impact of importing on the relative demand for non-production workers.

Suggested Citation

  • Kasahara, Hiroyuki & Liang, Yawen & Rodrigue, Joel, 2016. "Does importing intermediates increase the demand for skilled workers? Plant-level evidence from Indonesia," Journal of International Economics, Elsevier, vol. 102(C), pages 242-261.
  • Handle: RePEc:eee:inecon:v:102:y:2016:i:c:p:242-261
    DOI: 10.1016/j.jinteco.2016.07.008
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    5. Yasar, Mahmut & Rejesus, Roderick M., 2020. "International linkages, technology transfer, and the skilled labor wage share: Evidence from plant-level data in Indonesia," World Development, Elsevier, vol. 128(C).
    6. Miklós Koren & Márton Csillag, 2017. "Machines and Machinists: Importing Skill-Biased Technology," CEU Working Papers 2017_1, Department of Economics, Central European University.
    7. Ying Ge & Tony Fang & Yeheng Jiang, 2019. "Access to imported intermediates and intra‐firm wage inequality," The World Economy, Wiley Blackwell, vol. 42(8), pages 2364-2384, August.
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    More about this item

    Keywords

    Skill-biased technological change; Marginal treatment effect; Instrumental variable; Selection on unobservable returns;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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