Laksono, Riandy; Ok iyan o, Faja ; Vadila, Yessi
Wo king Pape
Labo ma ke impac o expo in a commodi y-dependen
na ion: The case o Indonesia
ADBI Wo king Pape , No. 1481
P o ided in Coope a ion wi h:
Asian De elopmen Bank Ins i u e (ADBI), Tokyo
Sugges ed Ci a ion: Laksono, Riandy; Ok iyan o, Faja ; Vadila, Yessi (2024) : Labo ma ke impac o
expo in a commodi y-dependen na ion: The case o Indonesia, ADBI Wo king Pape , No. 1481,
Asian De elopmen Bank Ins i u e (ADBI), Tokyo,
h ps://doi.o g/10.56506/BQNN1863
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/305413
S anda d-Nu zungsbedingungen:
Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen
Zwecken und zum P i a geb auch gespeiche und kopie we den.
Sie dü en die Dokumen e nich ü ö en liche ode komme zielle
Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich
machen, e eiben ode ande wei ig nu zen.
So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen
(insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en,
gel en abweichend on diesen Nu zungsbedingungen die in de do
genann en Lizenz gewäh en Nu zungs ech e.
Te ms o use:
Documen s in EconS o may be sa ed and copied o you pe sonal
and schola ly pu poses.
You a e no o copy documen s o public o comme cial pu poses, o
exhibi he documen s publicly, o make hem publicly a ailable on he
in e ne , o o dis ibu e o o he wise use he documen s in public.
I he documen s ha e been made a ailable unde an Open Con en
Licence (especially C ea i e Commons Licences), you may exe cise
u he usage igh s as speci ied in he indica ed licence.
h ps://c ea i ecommons.o g/licenses/by-nc-nd/3.0/igo/
ADBI Wo king Pape Se ies
LABOR MARKET IMPACT OF EXPORT
IN A COMMODITY-DEPENDENT
NATION: THE CASE OF INDONESIA
Riandy Laksono, Faja Ok iyan o,
and Yessi Vadila
No. 1481
Sep embe 2024
Asian De elopmen Bank Ins i u e
The Wo king Pape se ies is a con inua ion o he o me ly named Discussion Pape se ies;
he numbe ing o he pape s con inued wi hou in e up ion o change. ADBI’s wo king
pape s e lec ini ial ideas on a opic and a e pos ed online o discussion. Some wo king
pape s may de elop in o o he o ms o publica ion.
The Asian De elopmen Bank e e s o “China” as he People’s Republic o China.
Sugges ed ci a ion:
Laksono, R., F. Ok iyan o, and Y. Vadila. 2024. Labo Ma ke Impac o Expo in a
Commodi y-Dependen Na ion: The Case o Indonesia. ADBI Wo king Pape 1481. Tokyo:
Asian De elopmen Bank Ins i u e. A ailable: h ps://doi.o g/10.56506/BQNN1863
Please con ac he au ho s o in o ma ion abou his pape .
Email: [email p o ec ed]u, [email p o ec ed], [email p o ec ed]
Riandy Laksono is a PhD candida e a C aw o d School o Public Policy, Aus alian
Na ional Uni e si y. Faja Ok iyan o is a PhD candida e a he Resea ch School o
Economics, Aus alian Na ional Uni e si y. Yessi Vadila is a ade specialis a he
Economic Resea ch Ins i u e o ASEAN and Eas Asia.
The iews exp essed in his pape a e he iews o he au ho and do no necessa ily
e lec he iews o policies o ADBI, ADB, i s Boa d o Di ec o s, o he go e nmen s
hey ep esen . ADBI does no gua an ee he accu acy o he da a included in his pape
and accep s no esponsibili y o any consequences o hei use. Te minology used may
no necessa ily be consis en wi h ADB o icial e ms.
Discussion pape s a e subjec o o mal e ision and co ec ion be o e hey a e inalized
and conside ed published.
This pape is pa o he ADBI call o he esea ch p oposal “Globaliza ion and Equali y
a a Coun y Le el.” We hank Shuji o U a a, Wenxiao Wang, and pa icipan s o he
ADBI wo kshop “Globaliza ion and Equi y in Asia” o hei help ul commen s and
sugges ions and Rahadian Ahmad o his excellen esea ch assis ance. We hank he
Temple on Wo ld Cha i y Founda ion, Inc ( unde DOI 501100011730) o i s inancial
suppo unde he g an h ps://doi.o g/10.54224/30486.
Asian De elopmen Bank Ins i u e
Kasumigaseki Building, 8 h Floo
3-2-5 Kasumigaseki, Chiyoda-ku
Tokyo 100-6008, Japan
Tel: +81-3-3593-5500
Fax: +81-3-3593-5571
URL: www.adbi.o g
E-mail: [email p o ec ed]
© 2024 Asian De elopmen Bank Ins i u e
ADBI Wo king Pape 1481 R. Laksono e al.
Abs ac
Does expo lead o imp o emen in labo ma ke ou comes? The answe o his is no
always clea om he li e a u e. Despi e he ising ole o expo ma ke s, in o mali y is
s ill high, and inequali y is wo sening in many de eloping economies. In addi ion, expo
expansion d i en by commodi ies has also been linked wi h he Du ch disease phenomenon.
Using he case o a majo commodi y-dependen na ion, namely Indonesia, we assess he
labo ma ke e ec o a b oade expo expansion, which includes manu ac u ing expo s
apa om commodi ies. We examine Indonesia’s expo expansion du ing he ea ly 2000s,
which was igge ed by he impo demand shock in he People’s Republic o China (PRC)
ollowing i s accession o he Wo ld T ade O ganiza ion (WTO). We ind ha mo e exposu e
o expo expansion imp o ed indi iduals’ o mal employmen oppo uni ies in cumula i e
e ms by 2014. Expo expansion, howe e , does no appea o imp o e indi iduals’ ea nings
g ow h in gene al, bu only in speci ic cases. We u he ind his expo expansion episode o
be ela i ely p og essi e as i aises mo e o mal employmen oppo uni ies and ea nings
g ow h o indi iduals in he lowe - and middle-income b acke s. As we co e all adable
goods, we a e able o p oduce dis inc impac s o di e en expo ca ego ies. We show
ha he imp o emen in labo ma ke ou comes in ou indings is mainly unde pinned by
manu ac u ing expo expansion, a he han commodi ies.
Keywo ds: expo , labo ma ke , in o mal job, ea nings, inequali y, Indonesia, People’s
Republic o China (PRC)
JEL Classi ica ion: F14, F16, F63, F66, J31, J46
ADBI Wo king Pape 1481 R. Laksono e al.
Con en s
1. INTRODUCTION .......................................................................................................... 1
2. LITERATURE REVIEW ................................................................................................ 4
3. CONTEXT: HOW THE RISE OF THE PRC SHAPES THE EXPORT
OF INDONESIA AND OTHER DEVELOPING COUNTRIES ....................................... 5
4. METHODOLOGY ....................................................................................................... 11
5. DATA .......................................................................................................................... 14
6. RESULTS AND DISCUSSION ................................................................................... 18
6.1 Main Resul s ................................................................................................... 18
6.2 Discussion ...................................................................................................... 25
6.3 Role o In e nal Mig a ion ............................................................................... 28
6.4 Robus ness and Sensi i i y Tes .................................................................... 30
7. CONCLUSIONS AND IMPLICATIONS ...................................................................... 34
REFERENCES ...................................................................................................................... 36
APPENDIX A: SUPPLEMENTARY TABLES AND FIGURES .............................................. 39
ADBI Wo king Pape 1481 R. Laksono e al.
1
1. INTRODUCTION
The pa icipa ion o de eloping economies in global ade has inc eased conside ably
in he las wo o h ee decades. The sha e o expo s om de eloping Asian
coun ies,1 o example, jumped om a ound 11% in he ea ly 1990s o mo e han 20%
a he s a o he 2010s, d i en in pa icula by he ise o he PRC. Howe e , he
ques ion emains as o whe he his ade expansion has led o an imp o emen in
labo ma ke ou comes o wo ke s.
In ligh o his, wo main pieces o empi ical e idence come o mind. Fi s , a subs an ial
sha e o wo ke s in de eloping economies is s ill employed in in o mal ac i i y. I
accoun s o a ound 30% o o al employmen in La in Ame ican coun ies like B azil
and Colombia (Paz 2014) and mo e han 50% in he case o Indonesia (P i ad aja i,
Kusuma, and Saxena 2021). These in o mal jobs ypically a e o lowe quali y han
o mal ones as hey end o be mo e p eca ious and unde paid due o being exemp
om labo ma ke egula ion (Maloney 2004; Paz 2014; Ulyssea, 2020). Second,
despi e keeping ade open, inequali y in a b oade sense has ended upwa d in many
pa s o de eloping coun ies (Galiani and Sanguine i 2003; A anasio, Goldbe g, and
Pa cnik 2004; Ing 2009; Elsby, Hobijn, and Şahin 2013; Ka aba bounis and Neiman
2014; Xu, Li and Zhao 2018; Dao, Das, and Koczan 2019).2 Mo i a ed by hese ac s,
we e isi he issue o he labo ma ke impac o ade using he case o he expo
expansion episode in Indonesia. Indonesia is a good i o his s udy as i was exposed
o an expo boom mainly in he commodi y sec o d i en by he ise o he PRC in he
ea ly 2000s. Despi e ha , i has been a gued ha he commodi y expo boom did no
ansla e in o imp o emen in labo ma ke pe o mance (Coxhead and Sh es ha 2016;
Sh es ha and Coxhead 2020).
In his pape , we examine whe he being exposed o g ea e expo expansion leads o
be e labo ma ke ou comes among indi iduals in cumula i e e ms. Unlike p e ious
s udies ha ocus on po e y and employmen as labo ma ke ou comes (Topalo a
2010; McCaig 2011; Au o , Do n, and Hanson 2013; Kis-Ka os and Spa ow 2015), we
look a whe he expo expansion in Indonesia con ibu es o p o iding mo e good jobs,
especially in e ms o o mal employmen oppo uni ies o wo ke s. Mo e impo an ly,
al hough expo expansion in Indonesia is s ill mainly d i en by commodi y and na u al
esou ces expo s, we e alua e he impac o expo s ac oss all sec o s, including
manu ac u ing. This app oach di e s om exis ing s udies abou Indonesia’s expo
boom, which ha e ypically ocused mo e on he e ec o commodi ies (Coxhead and
Sh es ha 2016; Edwa ds 2019).
We e alua e wo main labo ma ke ou comes. The i s is cumula i e o mal
employmen , which is de ined as he yea s spen in o mal jobs be ween 2000 and
2014. The second is cumula i e o o al ea nings g ow h om 2000 o 2014, ob ained
om aking he di e ence in log ea nings be ween 2000 and 2014. The i s indica o
measu es how o en wo ke s s ay in o mal employmen o ansi ion in o o mal jobs i
hey s a o end up in in o mal wo k a some poin in ime. Meanwhile, he second one
indica es he ex en o which ea nings ha e imp o ed o e he co e ed pe iod. In
addi ion, we also assess he equali y dimension o expo expansion by e alua ing how
i has impac ed wo ke s a di e en ea nings le els. Al hough his s a egy can only
gi e indi ec e idence o how expo s a ec he s a e o inequali y, he mo e de ailed
1 De eloping Asian coun ies include all ASEAN membe s a es, he PRC, India, Pakis an, Bangladesh,
and S i Lanka. The sha e is compu ed based on UNCOMTRADE da a downloaded om he WITS
da abase.
2 This includes he alling labo sha e o income, ising wage and income inequali y, and skills p emium.
ADBI Wo king Pape 1481 R. Laksono e al.
2
dis ibu ional e idence could be mo e use ul o go e nmen , especially when
conside ing pa icula a ge s o he edis ibu ion o he gain om ade. Ou comes o
in e es a e cons uc ed om he sample o all adul indi iduals (aged 25 o 55) ha a e
consis en ly co e ed in he h ee wa es o he Indonesia Family Li e Su ey (IFLS)
2000, 2007, and 2014 (balanced panel).
To es ablish a causal ela ion, we use he case o Indonesia’s expo expansion d i en
by he eme gence o he PRC in he global economy. In pa icula , ou ea men
a iable is de ined as he change in Indonesia’s expo o he PRC om 2000 o 2007,3
which exposes dis ic s di e en ly due o hei a ia ion in sec o al employmen .4
Accession o he Wo ld T ade O ganiza ion (WTO) in 2001 has b ough he PRC no
only a signi ican expo supply shock bu also a subs an ial impo demand shock due
o he posi i e income e ec ha ollowed. This means we can isola e he exogenous
a ia ion o Indonesia’s expo s o he PRC ha emana es om he impo demand
shock in he PRC. This s a egy will emo e he labo ma ke e ec s emming om
domes ic economic de elopmen ac o s, which can also aise expo ing capabili y
ac oss he boa d. In ligh o his, we use he expo s o selec ed ASEAN coun ies o
he PRC as an ins umen .5 The in ui ion is ha i he PRC’s demand shock ma e s,
i will s imula e inc eased expo s om a ious coun ies, including Indonesia, and
he inc ease in expo s om o he economies o he PRC will no di ec ly ela e o
Indonesia’s labo ma ke pe o mance. This p o ides he basis o ou exclusion
es ic ion assump ion.
Compa ing he e olu ion o labo ma ke pe o mance among indi iduals li ing in
di e en exposu e si es, we ind a causal ela ionship be ween expo expansion and
good jobs. In pa icula , indi iduals li ing in hose dis ic s ha we e mo e exposed o
expo expansion o he PRC ended o ha e a g ea e likelihood o being employed in
o mal employmen in cumula i e e ms om 2000 o 2014. We ind his e ec o be
signi ican o employed indi iduals (wo ke s) ega dless o whe he hey s a ed as
o mal o in o mal wo ke s in he baseline yea o 2000. This means ha being exposed
o g ea e expo expansion inc eases he chance o wo ke s s aying in o mal jobs and
p omo es mo e ansi ion owa ds o mal employmen i hey s a ed as in o mal
wo ke s. Meanwhile, al hough wo ke s in he mo e exposed dis ic s ha e a la ge
ea nings g ow h, he e ec is no s a is ically signi ican . Taken oge he , hese esul s
sugges ha while being exposed o g ea e expo expansion o he PRC does no
necessa ily ansla e in o a la ge imp o emen in ea nings, i does con ibu e o
lowe ing he p eca i y o jobs among wo ke s in ela i e e ms ia mo e p e alen
o mal employmen .
We also ind ha he impac o expo expansion has been ela i ely p og essi e.
Exposu e o expo expansion aises mo e o mal employmen oppo uni ies and
ea nings g ow h o indi iduals in he lowe - o middle-income classes, especially hose
in he 3 d o he 7 h decile o ea nings in he yea 2000 (p e-shock pe iod). Meanwhile,
he e seems o be no e ec o he lowes (1s decile) and highes (10 h decile) income
g oups. This is consis en wi h ansi ional employmen pa e ns among indi iduals
co e ed in he IFLS, whe e mo emen om in o mal o o mal jobs mainly occu s
among lowe - and middle-income wo ke s (Ok iyan o 2024).
3 To imp o e accu acy, we use mi o ed expo da a, meaning he PRC’s impo s om Indonesia and
o he pa ne s.
4 We use Indonesia’s Labo Fo ce Su ey (Sake nas) da a o de e mine he sec o al employmen
a ia ion o each dis ic .
5 La e we show ha ou ins umen , namely ASEAN expo o he PRC, is highly ele an o p edic ing
he s uc u e o Indonesia’s expo e olu ion o he PRC.
ADBI Wo king Pape 1481 R. Laksono e al.
3
Fu he he e ogenei y analysis un eils in e es ing pa e ns. Fi s , he cumula i e impac
o expo on o mal employmen is mo e subs an ial o he g oup o wo ke s ha
s a wi h high in o mali y in he p e-shock yea o 2000. Unde s andably, as hey
ini ially ha e a la ge sha e o in o mali y, hey ha e mo e oppo uni ies o ansi ion in o
o mal employmen in la e pe iods as hey a e mo e exposed o expo expansion.
Second, unlike he impac on o mali y ha ells he s o y o ansi ion, we a gue
ha he he e ogeneous impac on ea nings g ow h e lec s he in ui ion o he
S olpe -Samuelson e ec , bu a he local le el: As Ja a island is exposed mo e o
expo expansion, he impac on e u n is g ea e o he ac o s ha a e ela i ely mo e
abundan in ha loca ion.
We show ha hese e ec s do no simply e lec he selec ion bias ac oss indi iduals
and dis ic s. The o e all impac and p og essi i y s o y emains unchanged when
compa ing indi iduals wi h simila obse able cha ac e is ics in he p e-shock pe iod
ob ained h ough he ma ching echnique. E en a e con olling o ini ial dis ic g ow h
in adable and o mal employmen om 1997 o 2000, he e ec o expo expansion
s ill exis s. This means he esul does no necessa ily e lec he con inua ion o
dis ic s’ de elopmen ends ha had occu ed e en be o e he PRC’s shock.
These indings, howe e , do no indica e an agg ega e impac o expo expansion on
inequali y. Ins ead, hey sugges he ela i e impac o expo ac oss indi iduals who
li e in dis ic s wi h di e en exposu e o expo expansion. Consequen ly, hey canno
be used o explain he high le els o in o mali y and inequali y in Indonesia du ing he
commodi y boom pe iod in he ea ly 2000s (Coxhead and Sh es ha 2016; Sh es ha
and Coxhead 2018). One main ca ea o his s udy is ha we keep indi iduals’
esidences ixed in he p e-shock pe iod, speci ically he yea 2000. This s a egy is
use ul o a oid so ing in o mo e a o able egions ollowing expo expansion, bu i
lea es us wi h one disad an age: I assumes no signi ican ole o in e nal mig a ion.
We u he a gue ha he conclusion is s ill likely o hold as he ole o in e nal mig a ion
is minimal in ou da a (Pa dede, McCann, and Venho s 2020).
This s udy ela es o wo s ands o li e a u e. Fi s ly, i ela es o li e a u e on he PRC’s
ise, bu mo e om he demand side. Many s udies ha e documen ed he ad e se
labo ma ke impac o he PRC om a supply o expo pe spec i e, especially in
de eloped coun ies (Au o , Do n, and Hanson. 2013; Au o e al. 2014; Acemoglu
e al. 2016). Howe e , he PRC’s demand shock in he wo ld’s economy migh
ha e p oduced di e en labo ma ke consequences o i s ading pa ne s, ye i s ill
ecei es much less a en ion (Feens a, Ma, and Xu 2019). Unlike he e ec o impo
om he PRC ha ends o educe good jobs, especially in he manu ac u ing sec o ,
and ea nings o wo ke s, we ind ha exposu e o expo o he PRC imp o es o mal
job oppo uni ies and ea nings g ow h, and he e ec is disp opo iona ely la ge o he
lowe - and middle-income classes.
Secondly, his pape en iches he li e a u e on he expo boom’s impac in he con ex
o a commodi y-dependen na ion. While manu ac u ing expo s is ound o p omo e
mo e o mali y and educe po e y (McCaig 2011; Mccaig and Pa cnik 2018), he e ec
o expo expansion ha is mainly d i en by commodi ies emains deba able. On he
one hand, Cos a, Ga ed, and Pessoa (2016), in he case o B azil, obse ed la ge
wage g ow h in hose egions mo e exposed o ising commodi y demand om
he PRC wi hou wo sening inequali y. In con as , Coxhead and Sh es ha (2016)
disco e ed a wo sening in o mali y and inequali y du ing Indonesia’s palm oil boom,
which was also d i en by he PRC’s eme gence. Ou in es iga ion o Indonesia’s
expo o he PRC does no yield he same conclusion as he la e . Despi e commodi y
expo s s ill domina ing Indonesia’s expo o he PRC, we ind ising o mal job
oppo uni ies and ea nings g ow h o indi iduals li ing in he egions mos exposed o
ADBI Wo king Pape 1481 R. Laksono e al.
4
expo o he PRC. One po en ial explana ion o he con as ing esul is ha we pick
up he o e all expo expansiona y e ec wi h he PRC a he han ocusing only on he
commodi y side. Thus, we also include he e ec o expansion in manu ac u ing expo ,
which may ha e con ibu ed di e en ly o labo ma ke pe o mance compa ed o
commodi y expo . We ind suppo o his a gumen : The posi i e impac o expo
expansion on o mal job oppo uni ies and ea nings g ow h is mos ly concen a ed in
he dis ic s wi h g ea e specializa ion in manu ac u ing ac i i ies. Meanwhile, he
impac o expo expansion in he dis ic s ha a e mo e elian on ag icul u e and
commodi y sec o s is no s a is ically signi ican , e en hough i is la ge in magni ude.6
This highligh s he impo ance o manu ac u ing expo s in imp o ing labo ma ke
ou comes in a commodi y-dependen coun y like Indonesia.
The es o his pape is o ganized as ollows. The ollowing sec ion e iews li e a u e
on his opic, while Sec ion 3 discusses he ele ance o he PRC’s ise as he sou ce
o expo expansion in Indonesia and o he de eloping coun ies. Sec ion 4 explains
he me hodology, while Sec ion 5 ou lines he da a used in his analysis. We hen
p esen and discuss he empi ical esul s in Sec ion 6 and conclude he pape in
Sec ion 7, whe e we also d aw some implica ions and desc ibe possible ex ensions o
u u e esea ch.
2. LITERATURE REVIEW
The s anda d p edic ion om ade heo y is ha wo ke s will bene i ela i ely mo e as
labo -abundan de eloping coun ies engage in in e na ional ade (K ugman, Obs eld,
and Meli z 2018). This is because openness o ade in hose coun ies will induce
specializa ion in unskilled labo -in ensi e ac i i ies, hus aising he demand o
unskilled labo ela i e o o he ac o s, such as skilled labo and capi al. Since
unskilled labo cons i u es he majo i y o he wo k o ce in de eloping economies,
imp o emen s in employmen and ea nings o hese wo ke s con ibu e o educing
inequali y. Fac o s will mo e away om impo -compe ing sec o s in sea ch o
be e pay in he expo sec o , which has expe ienced a ise in ela i e p ices due o
global ade.
Al hough he heo e ical p edic ion seems in ui i e and s aigh o wa d, he la es
empi ical e idence shows ha he e ec is much mo e nuanced. E en among wo ke s
who a e supposed o be on he winning side o globaliza ion, winne s and lose s exis
(Pa cnik 2017). The ques ion o he labo ma ke impac o ade will g ea ly depend on
he ypes o shocks wo ke s ace and hei ini ial cha ac e is ics.
In e ms o ade shocks, wo ke s expe ience di e en impac s depending on whe he
hey a e exposed o expo s o impo s. S udies show ha people li ing in he egion o
wo king in indus ies exposed o g ea e impo compe i ion ace ad e se labo ma ke
ou comes (Topalo a 2010; Dix-Ca nei o and Ko ak 2019), while hose li ing in a eas
wi h mo e exposu e o expo s end o a e be e (McCaig 2011; McCaig and Pa cnik
2018; E en and Leigh 2021). As in he case o he disemploymen impac o he
PRC’s impo in he mo e ad anced na ions, especially he US (Au o , Do n, and
Hanson 2013; Acemoglu e al. 2016), s udies in de eloping economies ha e also
linked exposu e o impo compe i ion wi h educed ea nings and employmen in he
local economy. Howe e , one dis inc ea u e p e ails in he de eloping economy: The
displaced wo ke s o en end up in in o mal jobs, which a e mo e in e io o he o mal
6 We la e show ha he la ge bu insigni ican coe icien o he commodi y- elian g oup is in la ed by he
weak ins umen p oblem.
ADBI Wo king Pape 1481 R. Laksono e al.
11
4. METHODOLOGY
We compa e he labo ma ke ou comes o indi iduals li ing in dis ic s mo e exposed
o expo expansion o he PRC o hose o indi iduals li ing in less exposed ones. Ou
baseline model is speci ied as ollows:
𝑦!"# = 𝛽$+𝛽%𝑅𝐸𝐸"+𝑋′!,$𝛽'+𝑍′",$𝛽(+𝛼)+𝜖! (1).
He e, i deno es indi idual, while and p indica e he dis ic and p o ince o esidence
o ha indi idual, espec i ely, which we hold cons an based on in o ma ion in he p e-
accession yea o 2000. 10 We keep indi iduals’ esidence cons an o wo main
easons. Fi s , ou goal is o e alua e whe he li ing in dis ic s acing mo e exposu e o
expo expansion makes a di e ence in la e labo ma ke pe o mance in cumula i e
e ms. Indi iduals’ choice o esidence in he yea 2000 would no ha e been made in
an icipa ion o he PRC’s shock d i en by WTO accession in 2001. Due o he sudden
shock o he PRC, jobseeke s and wo ke s simply would no ha e known which
dis ic s would bene i mo e. This allows us o cleanly isola e he labo ma ke impac
due o esiding in mo e ade-exposed dis ic s upon con olling o o he p eexis ing
indi idual and dis ic cha ac e is ics. Second, al hough his o ces us o assume no
meaning ul in e nal mig a ion, his s a egy is help ul o minimizing he sel -selec ion
p oblem as wo ke s may mo e o a be e -o egion wi h mo e expo exposu e o he
PRC (Au o e al. 2014). The selec ion p oblem will make in e ence mo e challenging
as any imp o emen in labo ma ke ou come could be in e p e ed as he e ec o
mo ing in o he be e -o egion, a he han o he ade shock.
Subsc ip c indica es ha ou ou come a iable (𝑦) is cons uc ed in cumula i e e ms
co e ing he pe iod om 2000 o 2014. Meanwhile, subsc ip 0 cap u es he yea (s)
p eceding he PRC’s shock pe iod. 𝑋!,$ is a ec o o indi idual-le el con ols in he
p e-accession yea o 2000, which includes gende , age, and a he ’s educa ional
backg ound, as well as sani a y condi ions su ounding one’s li elihood. 𝑍′",$ is ou
dis ic -le el con ol in he baseline yea o 2000, which includes adable employmen
g ow h in he p eceding pe iod o 1997 o 2000. This dis ic -le el con ol is chosen o
minimize he isk ha a ia ions in ou indi iduals’ ea nings g ow h and o mal
employmen o igina e om he end in he egional labo ma ke ha was happening
e en be o e he PRC’s accession o he WTO. Finally, 𝛼) ep esen s he ime-in a ian
p o incial ixed e ec s. Hence, his model essen ially compa es he labo ma ke
pe o mance o indi iduals li ing in di e en exposu e si es condi ional upon indi idual-
and dis ic -le el ini ial cha ac e is ics as well as p o ince ixed e ec s.
Ou cumula i e labo ma ke ou comes (𝑦!"#) consis o wo indica o s. The i s is he
yea s spen in o mal employmen .𝐿!"#
*0. This is cons uc ed by coun ing he numbe o
yea s an indi idual held o mal employmen om 2000 o 2014, as exp essed by he
ollowing o mula: 𝐿!"#
*=∑𝐿!"+
*
'$%,
+-'$$$ , whe e 𝐿!"+
*=1 i a pe son held a o mal job and
𝐿!"+
*=0 when wo king in in o mal employmen . The o mali y o employmen is de ined
solely based on employmen s a us, whe e o mal wo ke s a e hose who wo k as
ei he go e nmen employees, p i a e employees, o sel -employed wi h pe manen
10 I is impo an o no e ha ou samples co e adul s in hei p oduc i e age o 25 o 55. This means ou
sample mos ly consis s o employed indi iduals (wo ke s) as hese a e a hei mos p oduc i e age.
The e o e, we o en e e o hem as “wo ke s” a he han “indi iduals,” especially when analyzing
ea nings g ow h.
ADBI Wo king Pape 1481 R. Laksono e al.
12
wo ke s.11 The second ou come is cumula i e ea nings g ow h, calcula ed by aking he
long di e ence in log ea nings be ween 2014 and 2000. Speci ically, i is compu ed as
ollows: 𝑇𝐸𝐺!"# =∑ (ln𝐸.−ln𝐸./0)
., whe e 𝑤 ∈{2007,2014} co esponding o he
IFLS su ey wa es. We de ine ea nings as he o al income o an indi idual de i ed
om a ious sou ces. This means ea nings include no only sala y om wo king bu
also om o he business en u es.
𝑅𝐸𝐸" is ou main ea men a iable and measu es egional exposu e o expo
expansion a he dis ic le el. 𝛽%, he e o e, quan i ies he ela i e impac o li ing in he
mo e exposed dis ic s on labo ma ke pe o mance. The idea is ha while expo
expansion o he PRC only a ies ac oss indus ies and ime a he na ional le el,
dis ic s expe ience di e en exposu es due o a ying indus y specializa ions, as
measu ed by he employmen s uc u e be o e he shock pe iod. This makes i possible
o es ablish a dis inc exposu e measu e a he dis ic le el. Speci ically, we de ine ou
ea men a iable as he exposu e o he change in expo s o he PRC pe wo ke in a
pa icula dis ic :
𝑅𝐸𝐸"=A𝐿"1,$
𝐿",$
1
∆𝐸𝐸1+
23,4
𝐿1,$
(2).
Ou 𝑅𝐸𝐸", hence, is essen ially a “shi -sha e” a iable, which akes a ew s eps o
cons uc . We i s no malize he “shi ” componen , i.e., he na ional-le el change in
Indonesia’s expo o he PRC om 2000 o 2007 .∆𝐸𝐸1+
23,40, using he numbe o
wo ke s in ha pa icula sec o j. We limi ou a en ion o he shock in he ea ly 2000s,
as hese we e he yea s when he PRC’s impo s inc eased he mos be o e he global
inancial c isis (GFC) hi in 2008–2009 (see Table 1).
Then, we link he no malized expo expansion o he PRC .∆𝐸𝐸1+
23,4 𝐿1,$
C 0 o each
dis ic based on he sec o al employmen “sha e” in he local economy. Bo h he
na ional-le el sec o al employmen le el .𝐿1,$0 and he dis ic ’s sec o al employmen
sha e .𝐿"1,$ 𝐿",$
⁄0 a e cons uc ed using p e-accession labo ma ke su ey (Sake nas)
da a om 2000. The de ailed p oduc -le el ade da a a e collapsed o he mos
disagg ega ed sec o al classi ica ion allowed by he Sake nas da ase , which is a he
wo-digi ISIC based on e ision 2. The use o p e-accession labo ma ke da a enables
us o isola e he impac o ade shock .∆𝐸𝐸1+
23,40 and minimizes conce n ha he e ec
is d i en by changing sec o al specializa ion a he dis ic le el s imula ed by he ise o
he PRC. We ocus only on adable employmen when cons uc ing he dis ic s’
sec o al employmen sha e as i is mo e closely ela ed o he ade da ase and is
mo e ep esen a i e o he ac ual ade exposu e el by wo ke s a he dis ic le el
(see Table A1 o a lis o all adable sec o s used in his pape ).
Howe e , he main iden i ica ion challenge is ha he g ow h o Indonesia’s expo
o he PRC likely coincides wi h Indonesia’s economic de elopmen p og ess, which
aises p oduc ion and expo ing capabili y ac oss he boa d. Wi hou any modi ica ion,
11 This de ini ion is in line wi h he de ini ion used by he Indonesia S a is ics Agency (BPS), which e e s o
he In e na ional Con e ence o Labou S a is icians (ICLS-13) by he In e na ional Labou O ganiza ion
(ILO). We use his de ini ion o he en i e su ey pe iod o main ain consis ency. The la es de ini ion o
he o mali y o employmen is based on ICLS-17, whe e, in addi ion o iewing employmen s a us, i
also looks a economic uni s, con ibu ions o social secu i y, en i lemen o and bene i s om paid
annual lea e, and en i lemen o and bene i s om paid sick lea e. Some o ha in o ma ion is no
a ailable in he old su ey pe iod o he IFLS.
ADBI Wo king Pape 1481 R. Laksono e al.
13
we canno dis inguish whe he he impac on labo ma ke ou come is due o expo
expansion o Indonesia’s own de elopmen al p og ess.
To add ess his, we ake ad an age o he ac ha ollowing accession o he WTO in
2001, no only did he PRC’s expo inc ease, bu i s domes ic demand also ose
ollowing a posi i e income e ec . The ise o he PRC as a majo global impo e was
subs an ial and sudden as i occu ed in such a sho space o ime (see Table 1). The
PRC’s sha e in he wo ld’s impo demand has doubled in less han a decade. This
means we can isola e he exogenous a ia ion o Indonesia’s expo s o he PRC ha
emana es om he o eign demand shock componen . This s a egy allows us o
emo e he labo ma ke e ec s emming om domes ic ac o s. In ligh o his, we
use selec ed de eloping ASEAN coun ies’ expo s o he PRC as an ins umen o
ci cum en he endogenei y p oblem in ou ea men a iable. The ASEAN coun ies
include B unei Da ussalam, Malaysia, Myanma , he Philippines, Singapo e, and
Thailand. The main eason behind his selec ion is ha hey we e all pa o he
ounding membe s o he WTO in 1995. By ocusing on he ounding membe s, we
ensu e ha he change in expo s among ou IV coun ies is no d i en by he expo
supply shock associa ed wi h la e accession in o he WTO in he 2000s. The ise in
expo o Vie Nam in he 2010s is a case in poin (see Figu es 3 and 4). Meanwhile, o
he ounding membe s, any expo supply shock associa ed wi h membe ship o he
WTO would ha e s a ed in he second hal o he ‘90s and likely dissipa ed in he
pe iod o ou analysis, which co e s he 2000s and ea ly 2010s. Thus, by limi ing he IV
o include only he ounding membe s o he WTO in he ASEAN egion, we can ocus
on he impac o he impo demand shock in he PRC ha s a ed in he ea ly 2000s
and minimize he con amina ion om o he shocks.
Ou ins umen al a iable is cons uc ed by he ollowing o mula:
𝑅𝐸𝐸"
567 =A𝐿"1,%880
𝐿",%880
1
∆𝐸𝐸1+
567,4
𝐿1,%880
(3).
He e, ∆𝐸𝐸1+
567,4 ep esen s he expo expansion o selec ed ASEAN coun ies o he
PRC in he same pe iod o 2000 o 2007. Howe e , o he ins umen , we use he
employmen s uc u e om Sake nas 1997 a he han 2000. The h ee-yea lag is
employed o mi iga e any simul anei y bias be ween he main ea men a iable and
he IV, as Au o e al. (2014) sugges ed. This app oach also helps p e en ou IV om
di ec ly in luencing ou comes due o an icipa o y e ec s o employmen s uc u e nea
he iming o he PRC’s accession o he WTO.
The in ui ion is ha he demand shock in he PRC will s imula e inc eased expo s om
a ious coun ies, including Indonesia. This is p ecisely he e e se o he PRC’s expo
supply shock, as discussed in Au o , Do n, and Hanson (2013), which simul aneously
a ec ed impo s in o he US and o he high-income economies. In addi ion, he
inc ease in expo s om selec ed ASEAN coun ies o he PRC will no di ec ly
in luence Indonesia’s labo ma ke pe o mance, hence gi ing suppo o ou exclusion
es ic ion assump ion.
The immedia e h ea o ou IV design is ha expo expansion could be d i en by
he common expo supply shock ac oss de eloping economies. Pe haps a posi i e
echnological shock coincided wi h he PRC’s ise and consequen ly helped coun ies
expand hei expo o all ading pa ne s. This co ela ed supply shock h ea ens he
alidi y o ou design as ou ins umen migh no be exogenously de e mined. Based
on he analysis in Sec ion 3, we a gue ha he possibili y o a co ela ed supply shock
ADBI Wo king Pape 1481 R. Laksono e al.
14
does no pose a se ious issue in ou model. I hese co ela ed shocks we e impo an ,
we would ha e seen apid expo g ow h o o he majo ading pa ne s a he han
only o he PRC. Ins ead, we ound a apid expo expansion, especially in he ea ly
2000s, ha was uniquely applied only o he PRC. The g ow h o expo s o o he majo
ading pa ne s, such as Japan, he US, Canada, he EU, and he UK, simply ell sho
o ha o he PRC (see Figu e 4). The e o e, al hough i canno be en i ely uled ou ,
his minimizes conce ns ha he expo expansion is d i en by a co ela ed expo
shock among coun ies.
The o he h ea ela es o he selec ion bias p oblem. The di e ence in labo ma ke
pe o mance ac oss indi iduals li ing in di e en exposu e si es migh be d i en by
ini ial indi iduals’ cha ac e is ics and p eexis ing ends in he dis ic s ha had al eady
a ied e en be o e he ise o he PRC. To minimize he conce n o selec ion bias due
o indi idual cha ac e is ics, as a obus ness check, we will only compa e simila
indi iduals based on hei obse able cha ac e is ics ob ained h ough ma ching
echniques. We will so indi iduals based on exposu e o expo expansion and pu
hose li ing in dis ic s wi h 𝑅𝐸𝐸" abo e he 75 h pe cen ile in a ea ed g oup, and
he es in a con ol g oup. The wo ke s in he ea ed and he con ol g oup a e
hen ma ched using one- o-one nea es neighbo p opensi y sco e ma ching (PSM)
based on indi idual-le el co a ia es .𝑋!",$0 as well as o mal job s a us, yea ly
ea nings, and educa ion le el in he base yea o 2000. We hen un Equa ion (1) o
he ma ched samples and compa e i wi h he main esul s. To accoun o p eexis ing
dis ic s’ ends, we al eady con ol o he dis ic s’ labo ma ke e olu ion om 1997 o
2000, which mainly includes g ow h in adable employmen . Fo comple eness,
we also expe imen wi h con olling o he g ow h in o mal employmen in ou
obus ness analysis.
5. DATA
This pape combines h ee da ase s. The i s is he Indonesia Family Li e Su ey
(IFLS) da ase , which is ou p ima y da a sou ce o indi idual labo ma ke ou comes
and cha ac e is ics. The IFLS is a longi udinal household su ey ha con ains key
in o ma ion on Indonesian indi iduals and households, including consump ion, income,
asse s, educa ion, mig a ion, labo ma ke ou comes, and o he demog aphic a iables.
The i s wa e o he su ey, IFLS1, was conduc ed in 1993–1994 and co e ed 13 ou
o 27 p o inces in Indonesia, ep esen ing abou 83% o he popula ion a ha ime.
The nex wa e hen acked he same sample oughly e e y se en yea s wi h a e age
econ ac a es o a ound 87.8% o all ounds o he su ey pe iod. The la es su ey
pe iod in 2014 included o e 70,000 indi iduals and a ound 16,000 households.
Table 2 p o ides b ie desc ip i e s a is ics o he ull IFLS sample.
Table 2: Full IFLS Sample
Full Sample
Yea
Obse a ions
Mean Age
(yea s)
Log
(mon hly eal income)
Hou s Wo ked
(weekly)
Fo mal Sha es
(% o o al wo ke s)
1993
33,115
27.554
12.930
42.444
39.1%
1997
39,714
37.181
12.961
41.382
44.5%
2000
49,424
36.313
12.925
43.826
45.2%
2007
62,935
37.04
13.169
43.718
38.1%
2014
75,680
38.496
13.408
46.485
42.5%
Sou ce: Au ho s’ calcula ion based on IFLS da ase s.
ADBI Wo king Pape 1481 R. Laksono e al.
15
Fo his s udy, we u ilize he las h ee su eys, namely 2000, 2007, and 2014, since
he change in expo end is isible a e 2000. In pa icula , we use balanced panel
da a o he IFLS, whe e he sample comp ises indi iduals who we e consis en ly
p esen in he 2000, 2007, and 2014 su ey wa es. In addi ion, we u he limi ou
sample o esponden s a hei p oduc i e age, be ween 25 and 55 yea s old, o he
en i e su ey wa e. In his way, we can s udy he dynamics o he labo ma ke using
he same indi iduals and a oid he possibili y o di e en idiosync a ic cha ac e is ics
a ec ing he dynamics o he labo ma ke . We ake ad an age o he e ospec i e
na u e o employmen - ela ed ques ions in he IFLS, which allows us o cons uc
cumula i e o mal employmen .𝐿!"#
*0 based on annual da a om 2000 o 2014, a he
han by wa es. The e ospec i e ques ion is a ailable only o limi ed ques ions, such
as he s a us, ype, and loca ion o employmen . This is why we a e able o cons uc
cumula i e ou comes based on annual da a o o mali y bu no o ea nings g ow h.
Table 3 ou lines he cha ac e is ics o indi iduals who a e he subjec s o ou analysis.
As expec ed, as all o hem a e a hei p oduc i e age, mos indi iduals in ou sample
a e in he labo o ce and employed. Howe e , o mal employmen is a e in ou
da ase , whe e wo ke s a e ypically ei he sel -employed, sel -employed wi h unpaid
o empo a y wo ke s, unpaid amily wo ke s, o eelance s. The ea nings spli
be ween o mal and in o mal employmen can be signi ican , whe e hose wi h o mal
employmen can ea n up o 60% mo e han hose holding in o mal jobs (see Table 4).
This means he quali y o jobs is s ill an issue o he majo i y o wo ke s in Indonesia,
a leas o hose ep esen ed in ou da ase s. This mo i a es us o look a he impac o
expo on o mali y ins ead o on employmen . In ui i ely, as he majo i y o indi iduals
ha e been employed, any e ec on expo expansion will likely be de ec ed h ough he
o mali y ma gin a he han he employmen one.
Table 3: Balanced Panel o IFLS
Balanced Panel
Yea
Obs
Mean Age
(yea s)
Mon hly Real
Income
(log)
Hou s
Wo ked
(weekly)
No in Labo
Fo ce
(% o o al
obse a ions)
Employed
Sha es
(% o o al
labo o ce)
Fo mal
Sha es
(% o o al
employed)
2000
7,017
32.66
13.03
44.15
0.6%
78.7%
47.3%
2007
7,017
39.90
13.28
43.43
1.5%
83.0%
34.6%
2014
7,017
46.75
13.49
46.66
3.8%
84.7%
35.8%
Sou ce: Au ho s’ calcula ion based on IFLS da ase s.
Table 4: Di e ences in Wo ke s’ Ea nings by Type o JOB
Yea
Mon hly Real Income (log)
Di e ence
-s a
p- alue
( wo- ailed)
Fo mal
In o mal
2000
13.15
12.88
26.99%
9.08
0.000
2007
13.62
13.01
60.88%
21.33
0.000
2014
13.85
13.21
64.14%
20.61
0.000
Sou ce: Au ho s’ calcula ion based on IFLS da ase s.
The second is a ade da ase ob ained om he UNCom ade da abase, accessed
h ough he Wo ld In eg a ed T ade Solu ion (WITS) pla o m. We use mi o ed expo
da a whe e he PRC’s impo s om Indonesia and o he coun ies a e used o obse e
expo s in o he PRC. The mi o ed expo da a a e unde s ood o imp o e accu acy
and be mo e ep esen a i e o he ac ual expo alue, as epo ing economies end o
ADBI Wo king Pape 1481 R. Laksono e al.
16
unde epo hei expo alue. The unde epo ing p oblem is much less o an issue in
impo s a is ics as coun ies a e compelled o check ade alue mo e ho oughly o
en o ce ade egula ions on goods en e ing hei bo de .
We hen link hese ade da a o he dis ic le el using hei labo ma ke s uc u e in
he p e-accession yea o 2000 based on Indonesian Labo Fo ce Su ey (Sake nas)
da a. Apa om Sake nas 2000, we also use Sake nas 1997 o cons uc ou IV and
dis ic -le el con ol a iable. Sake nas, ou hi d da ase in his s udy, is a c oss-
sec ional household su ey speci ically designed o collec in o ma ion on labo o ce
s a is ics, allowing us o ga he he sec o al employmen a iable. The Sake nas
da ase s o e de ailed sec o al employmen in o ma ion o each dis ic in Indonesia.
While i is acknowledged ha Sake nas may no be ep esen a i e a a le el lowe han
he p o ince (as highligh ed by Kis-Ka os and Spa ow (2015)), his is unlikely o
in oduce bias in o ou econome ic model (1), especially as we use dis ic s’ labo
ma ke s uc u e in he yea 2000, which p eceded he demand shock in he PRC
(E en, Leigh , and T egenna 2019). Addi ionally, ou ocus is no on es ima ing o al
employmen pe dis ic bu a he on de e mining he ela i e impo ance o a pa icula
sec o j in a dis ic ’s labo ma ke . Al e na i ely, one could use a sampled e sion o
he Indonesian Census o cons uc sec o al weigh s o each dis ic , a ailable h ough
he In eg a ed Public Use Mic oda a Se ies (IPUMS) sys em. Howe e , he main
d awback is ha he IPUMS da ase only con ains a e y small sample o Census da a,
esul ing in a signi ican unde es ima ion o na ional-le el sec o al employmen .𝐿1,$0,
which is cen al in no malizing expo s in o he PRC. Ano he limi a ion o IPUMS da a
is ha hey ha e much less sec o al a ia ion han Sake nas, especially in he pe iod
o in e es , whe e sec o s only a y a he one-digi ISIC le el. This will esul in less
da a a ia ion, o in o he wo ds, expo expansion s uc u es ha a e qui e simila
ac oss dis ic s.12
The Sake nas 2000 da ase encompasses 303 ou o he o al o 342 dis ic s in
Indonesia o he yea 2000.13 Following he imposi ion o dis ic -le el weigh based on
Sake nas 2000, we ind a conside able a ia ion in dis ic -le el exposu e o expo
expansion o he PRC. The highes exposu e ca ego y comp ises 59 dis ic s,
encompassing Suma e a (22.22%), Ja a (38.89%), Bali (5.56%), Kaliman an (25.93%),
Sulawesi (5.56%), and Maluku (11.11%). Among he op en dis ic s wi h he highes
exposu es, Kaliman an island domina es wi h six dis ic s. Gi en ha Indonesia mainly
expo s esou ce-based p oduc s o he PRC, i ’s easonable o an icipa e ha egions
in Kaliman an island, which ely hea ily on he esou ces sec o , will ha e he highes
le el o exposu e. The o he dis ic s in his highes ca ego y include dis ic s om Ja a
(2), hen Sulawesi (1), and Maluku (1). On he o he hand, dis ic s wi h he smalles
exposu e o expansion a e p edominan ly om Ja a and Suma e a, while some
dis ic s a e exposed o expo con ac ion. The la e include Sukabumi, Ko awa ingin
Ba a , Kepulauan Sula, and Palu, anked consecu i ely om he highes con ac ion.
The Sake nas-based expo exposu e a iable (𝑅𝐸𝐸") is hen ma ched o he IFLS
da ase , which a ies a he indi idual le el, using esiden ial in o ma ion. Howe e , as
discussed in he p e ious sec ion, we only ma ch i wi h esiden ial da a as o 2000 and
12 The di e ence in e ms o pe iods ac oss he h ee da ase s ( ade, Sake nas, and IFLS) is no an issue
he e as we aim o see whe he indi iduals li ing in he mo e exposed dis ic s in he yea o 2000
expe ience be e labo ma ke ou comes la e on. Cumula i e ou comes om IFLS 2000–2014 a e
used o assess labo ma ke pe o mance ollowing ou ade shock. Meanwhile, he ade shock
a iable is de i ed om expo expansion da a be ween 2000 and 2007, which a e mapped o
he dis ic le el using Sake nas 2000 o iden i y sec o al specializa ion in each dis ic based on
employmen s uc u e.
13 Dis ic s ha a e absen om Sake nas 2000 p ima ily co e Papua island and Kaliman an.
ADBI Wo king Pape 1481 R. Laksono e al.
17
assume i o be ixed o e ime o a oid a so ing p oblem as indi iduals migh mo e o
mo e a o able dis ic s due o oppo uni ies p esen ed by expo expansion o he
PRC. Since he IFLS da ase co e s ewe dis ic s han Sake nas, due o mo e limi ed
sampling co e age o he o me , some dis ic s do no ind hei ma ch. The numbe o
dis ic s educes o 192, ep esen ing only 56.14% o all Indonesian dis ic s in 2000. In
his IFLS-ma ched da ase , he op en dis ic s wi h he highes exposu es a e now
domina ed by dis ic s in Ja a island, ollowed by Kaliman an, hen Suma a, Bali, and
Sulawesi. Kaliman an no longe domina es he dis ic s wi h highes exposu e because
many o he dis ic s in Kaliman an a e no co e ed by he IFLS da ase .
This limi a ion is expec ed, as he IFLS da ase , while encompassing app oxima ely
83% o he Indonesian popula ion, only ep esen s 13 o he 27 p o inces14. The IFLS
includes ou p o inces on Suma a (No h Suma a, Wes Suma a, Sou h Suma a,
and Lampung), all i e Ja anese p o inces (DKI Jaka a, Wes Ja a, Cen al Ja a, DI
Yogyaka a, and Eas Ja a), and ou p o inces co e ing o he majo island g oups
(Bali, Wes Nusa Tengga a, Sou h Kaliman an, and Sou h Sulawesi). Howe e , he
IFLS lacks in o ma ion o Papua and he Maluku Islands, as well as subs an ial pa s
o almos all islands excep o Ja a. When analyzed by dis ic , Ja a has he mos
signi ican p opo ion o he co e ed dis ic s, comp ising 90.91% o he o al dis ic s,
while Suma a and Bali-Nusa Tengga a ha e ep esen a ion om only 50% o he o al
numbe o a ailable dis ic s. Meanwhile, Sulawesi and Kaliman an a e he leas
ep esen ed, wi h 37.78% and 30.77% o he dis ic s, espec i ely. Consequen ly, his
s udy can only cap u e a limi ed pa o he impac o expo s on labo ma ke dynamics
o he eas e n pa o Indonesia.
Table 5: Summa y S a is ics
Va iable
N
Mean
SD
Min
Max
Fo mal wo ke in 2000, 1 = yes, 0 = no
5,486
0.47
0.50
0.00
1.00
In labo o ce in 2000, 1 = yes, 0 = no
6,974
0.80
0.40
0.00
1.00
Employed in 2000, 1 = yes, 0 = no
6,974
0.79
0.41
0.00
1.00
Yea s o being employed, 2000–2014 (yea s)
7,017
11.59
4.75
0.00
15.00
Yea s in o mal employmen , 2000–2014 (yea s)
7,017
4.26
5.53
0.00
15.00
To al g ow h o income, nominal, 2000–2014
4,475
1.47
1.42
–6.26
13.59
To al g ow h o income, eal, 2000–2014
4,475
0.57
1.39
–7.29
12.56
Indonesia’s expo expansion 2000–2007, 2000 dis ic weigh
(Rp housand pe wo ke )
6,911
2,079.47
3,600.76
–200.43
23,983.23
ASEAN’s expo expansion 2000–2007, 1997 dis ic weigh
(Rp housand pe wo ke )
6,911
21,563.16
21,488.39
630.91
234,000.00
La in Ame ica’s expo expansion 2000–2007, 1997 dis ic
weigh (Rp housand pe wo ke )
6,911
5,263.50
5,853.66
1,506.51
54,530.27
ASEAN and La in Ame ica’s expo expansion 2000–2007, 1997
dis ic weigh (Rp housand pe wo ke )
6,911
26,827.32
24,684.66
2,137.42
255,000.00
Gende , 1 = male, 0 = emale
7,017
0.45
0.50
0.00
1.00
Age in 2000 (yea s)
7,017
32.66
4.92
25.00
55.00
Fa he ’s yea s o educa ion in 2000 (yea s)
7,007
0.95
2.80
0.00
17.00
Su icien en ila ion in 2000, 1 = yes, 0 = no
7,007
0.79
0.41
0.00
1.00
Piles o ash a ound he house in 2000, 1 = yes, 0 = no
7,007
0.12
0.33
0.00
1.00
Dis ic ’s adable employmen , compound annual g ow h a e
1997–2000 (%)
6,911
3.12
18.76
–52.88
148.50
Dis ic ’s o mal employmen , compound annual g ow h a e
1997–2000 (%)
6,743
–1.05
15.60
–48.38
100.40
P o ince loca ion in 2000 (p o ince code)
7,017
35.28
15.40
12.00
73.00
Sou ce: Au ho s’ calcula ion based on me ged UNCOMTRADE, Sake nas, and IFLS da ase s.
14 IFLS I (1994) and IFLS 2 (1997).
ADBI Wo king Pape 1481 R. Laksono e al.
18
Ano he ca ea is ha , in some cases, dis ic s ha a e p esen in he IFLS da a a e
missing om he Sake nas da ase . In his case, we u ilize he employmen s uc u e
om he nea es a ailable yea in Sake nas. Al hough his cleaned da ase se es as
he p ima y e e ence h oughou he analysis, we demons a e la e ha excluding he
missing dis ic s om ou analysis does no al e he main conclusions, pa icula ly
ega ding he impac o expo s on o mal employmen and i s p og essi e impac on
Indonesia’s labo ma ke .
Table 5 summa izes he desc ip i e s a is ics o all a iables used in his pape
(see Table A2 o Appendix A o he summa y s a is ics o s anda dized a iables).
6. RESULTS AND DISCUSSION
6.1 Main Resul s
Following he empi ical speci ica ion in Equa ion (1), we examine whe he indi iduals
li ing in dis ic s mo e exposed o expo expansion o he PRC ha e be e labo
ma ke ou comes han hose in less exposed ones. Table 6 summa izes he esul s and
epo s bo h he OLS and 2SLS es ima es o o mali y and ea nings g ow h analysis.
Columns (1) and (4) es ima e he impac h ough he OLS model wi hou con olling o
p o ince ixed e ec s, while Columns (2) and (5) use he ull se o con ol a iables.
Columns (3) and (6) p esen he esul s o he second-s age eg ession om ou 2SLS
model, whe e he p edic ed ea men a iable .𝑅𝐸𝐸
E"0 is used in he eg ession ins ead
o he ac ual one a e ins umen ing i wi h IV as speci ied in Equa ion (3). The esul
o he i s -s age eg ession is p o ided in Table 7. All coe icien s a e measu ed in
s anda dized alue.
Table 6: The Impac o Expo Expansion o he PRC on Fo mal Employmen
and Ea nings G ow h: OLS and 2SLS Compa ison
(1)
(2)
(3)
(4)
(5)
(6)
Fo mal Employmen
Ea nings G ow h
OLS
OLS
2SLS
OLS
OLS
2SLS
Indonesia’s expo expansion 2000–2007,
2000 dis ic weigh (s anda dized)
0.0571*
0.0519
0.384**
0.00924
0.0142
0.0746
[0.0268]
[0.0320]
[0.148]
[0.0232]
[0.0268]
[0.0513]
Obse a ions
6,901
6,901
6,901
4,406
4,406
4,406
R2
0.103
0.116
0.054
0.010
0.018
0.017
P o ince FE
No
Yes
Yes
No
Yes
Yes
Co a ia es
Yes
Yes
Yes
Yes
Yes
Yes
Kleibe gen-Paap F-S a
33.00
36.04
No e: S anda d e o s a e p o ided in b acke s and a e clus e ed wi hin dis ic . The model uses expo o he ASEAN
egion o he PRC as he ins umen , which includes he ollowing coun ies: B unei Da ussalam, Myanma , Malaysia,
he Philippines, Singapo e, and Thailand. Indi idual-le el da a co e all adul indi iduals ha exis ac oss he h ee la es
IFLS wa es: 2000, 2007, 2014 (balanced panel). Con inuous a iables a e ans o med in o s anda dized a iables wi h
mean = 0 and s anda d de ia ion = 1. Co a ia es a e used ac oss all es ima ions. The S ock-Yogo (2005) c i ical alue
wi h a 10% maximal bias is 16.38. Signi icance: + p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001.
Sou ce: Au ho s’ calcula ion.
ADBI Wo king Pape 1481 R. Laksono e al.
19
Based on he IV es ima ion in Columns (3) and (6), we ind ha , in gene al, indi iduals
li ing in dis ic s wi h g ea e exposu e o expo expansion o he PRC end o
ha e be e labo ma ke ou comes, in e ms o bo h o mal employmen and ea nings
g ow h by 2014 in cumula i e e ms. In pa icula , indi iduals in dis ic s wi h a
1 s anda d de ia ion la ge exposu e o expo expansion can accumula e la ge o mal
employmen la e on by almos 0.4 s anda d de ia ions. Howe e , he magni ude
o impac is much smalle on ea nings g ow h, wi h a s a is ically insigni ican impac
(see Table A3 o Appendix A o he ull esul s along wi h co a ia es). The i s -s age
eg ession esul s in Table 7 show ha ou ins umen , namely selec ed ASEAN
coun ies’ expo s o he PRC, s ongly co ela es wi h Indonesia’s expo s o he PRC.
This suppo s ou a gumen ha Indonesia’s expo expansion o he PRC om 2000 o
2007 was d i en by he PRC’s demand shock. I he supply shock speci ic o Indonesia
ma e ed mo e, we would no ha e obse ed his co ela ion ac oss di e en expo e s.
Ano he no able obse a ion om Table 6 is ha he impac o expo expansion om
he OLS model ends o be much smalle han he esul s om 2SLS. Since he
F-s a is ics is qui e la ge (la ge han he c i ical alue), he ampli ied coe icien s om
he 2SLS model a e less likely o be caused by a weak ins umen . Ra he , he smalle
coe icien in he OLS model is likely o be d i en by endogenei y bias in ou ea men
a iable associa ed wi h an unobse ed domes ic expo supply shock. This a enua ion
bias has also been disco e ed in o he s udies wi h simila se ings, such as by Au o
Do n, and Hanson (2013), in which endogenei y bias unde es ima ed he impac o
impo s om he PRC on he US labo ma ke . The e o e, he esul s om he 2SLS
model a e p e e ed.
Table 7: The Impac o Expo Expansion o he PRC: Fi s -S age Reg ession
(1)
(2)
Dependen : Indonesia’s Expo Expansion
2000–2007, 2000 Dis ic Weigh (S anda dized)
Fo mal Employmen
Analysis
Ea nings G ow h
Analysis
ASEAN’s expo expansion 2000–2007, 1997 dis ic
weigh (s anda dized)
0.285***
0.283***
[0.0496]
[0.0471]
Obse a ions
6,901
4,406
P o ince FE
Yes
Yes
Co a ia es
Yes
Yes
No e: S anda d e o s a e p o ided in b acke s and a e clus e ed wi hin dis ic . Signi icance: + p < 0.10, * p < 0.05,
** p < 0.01, *** p < 0.001.
Sou ce: Au ho s’ calcula ion.
Despi e ou F-s a is ics being g ea e han he adi ional c i ical alue p o ided by
S ock and Yogo (2005) (see F-s a in Table 6), he e has been ecen deba e in he IV
li e a u e abou how s ong an ins umen should be o allow o a alid in e ence
(Lee e al. 2022; Ang is and Kolesá 2024). This is impo an as he 2SLS es ima o
can be un eliable i i su e s om he weak-ins umen p oblem (And ews, S ock, and
Sun 2019). Ra he han solely depending on he sc eening es based on he s eng h
o he F-s a is ics o make an in e ence, al e na i ely, one can cons uc con idence
in e als o he ea men a iable o in e es in he second-s age eg ession unde
he assump ion ha he ins umen may be weak (Keane and Neal 2023). Unlike he
sc eening me hod, he la e app oach acknowledges he unce ain y a ound he
pa ame e es ima es and, ins ead, de elops con idence in e als ha may con ain ue
pa ame e s independen o he ins umen ’s s eng h in he i s -s age eg ession
(And ews, S ock, and Sun 2019). In e ence will be alid as long as he poin o
es ima es lies wi hin he cons uc ed con idence se s. This means ha he es ima ed
ADBI Wo king Pape 1481 R. Laksono e al.
20
coe icien s s ill all wi hin he ange o plausibly ue pa ame e s ha could occu e en
unde weak ins umen s.
To implemen con idence se -based in e ence, we ollow And ews (2018) in
cons uc ing con idence se s ha a e obus o he e oskedas ic, clus e ed, and se ially
co ela ed da a (o en called “iden i ica ion- obus con idence se s”). Table 8 p esen s
obus con idence in e als o ou ea men a iable in he o mali y and ea nings
g ow h analysis. I shows ha all o ou coe icien s o in e es s ill lie wi hin he
con idence se s. Taken oge he , hese esul s sugges ha in e ence based on he
main esul s in Table 6 emains alid e en unde he assump ion o a weak ins umen .
Table 8: The Impac o Expo Expansion o he PRC: Robus Con idence Se s
Dependen
E ec o Expo
Expansion
(poin es ima es)
Robus Con idence
Se s
Non obus (Wald)
Con idence Se s
Fo mal Employmen
0.384**
[0.02, 0.646]
[0.093, 0.675]
Ea nings G ow h
0.075
[–0.025, 0.186]
[–0.026, 0.175]
No e: Con idence se s a e based on 1000 g id poin s in he in e al o [-0.5, 2]. Robus con idence se s a e based on he
Ande son-Rubin (AR) es and obus o he e oskedas ici y and clus e ing issues. Wald con idence se s a e based on
2SLS es ima es and a e no obus o weak ins umen s. Signi icance: + p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001.
Sou ce: Au ho s’ calcula ion.
We u he ind ha he impac o expo expansion on o mal employmen is signi ican
only among employed indi iduals (wo ke s) ega dless o he employmen ype in he
baseline yea o 2000 (see Figu e 7). The magni ude o impac is compa able be ween
hose who hold o mal and in o mal jobs in 2000: A1 s anda d de ia ion la ge
exposu e o expo expansion o he PRC leads o a g ea e likelihood o holding o mal
employmen in cumula i e e ms by a ound 0.2 s anda d de ia ions (see Table A4 in
Appendix A o he ull esul s). This means ha being exposed o g ea e expo
expansion inc eases he chance o wo ke s s aying in o mal jobs and p omo es mo e
ansi ion owa ds o mal employmen i hey s a ed as in o mal wo ke s. Meanwhile,
we do no obse e any disce nible impac o expo expansion on o mal employmen
p ospec s by 2014 among indi iduals who we e unemployed in 2000. This u he
indica es ha expo expansion imp o es he quali y o jobs mainly h ough in ensi e
ma gins, as i mos ly a ec s hose who we e al eady wo king in he s a ing pe iod. In
e ms o ea nings g ow h, he impac o expo expansion is no s a is ically signi ican
ega dless o indi iduals’ employmen s a us in 2000 (see Figu e 7 and Table A5 in
Appendix A o he ull esul s).
F om he equali y dimension, we disco e ha he impac o expo expansion o he
PRC has been ela i ely p og essi e (see Figu e 8). Exposu e o expo expansion
aises mo e o mal employmen oppo uni ies and ea nings g ow h o indi iduals in he
lowe - o middle-income classes, especially hose in he 3 d o 7 h decile o ea nings in
he yea 2000 (p e-shock pe iod). Meanwhile, he e seems o be no e ec o he
lowes (1s decile) and highes (10 h decile) income g oups (see Tables A6 and A7 in
he Appendix A o he ull esul s).
ADBI Wo king Pape 1481 R. Laksono e al.
27
Ou s udy does no sha e his bleak iew. Measu ing expo expansion in all adable
sec o s, including commodi ies, we ound ha o mali y imp o es and ea nings g ow
as e o hose exposed mo e o expo expansion o he PRC. In addi ion, we ound
expo expansion o he PRC o be ela i ely p og essi e, as he e ec is el chie ly by
indi iduals in lowe - and middle-income g oups. We a gue ha he di e ences in
he esul s could be d i en by he sec o al co e age in his pape , which ocuses no
only on commodi ies bu also on b oade manu ac u ing sec o s (see a comple e lis in
Table A1 o Appendix A). As shown in Figu e 6, Indonesia expe ienced no only
a subs an ial inc ease in he expo o commodi ies, especially palm oil and mining
p oduc s, bu also a meaning ul g ow h in he expo o manu ac u ed p oduc s, albei
o a much lesse ex en . The indings in Table 11 sugges ha he expansion in
manu ac u ing expo has impac ed labo ma ke pe o mance di e en ly han he
commodi y expo . This means ha o ge a ulle pic u e o he impac o an expo
boom, i is essen ial o co e manu ac u ing expo s apa om commodi y ones.
The imp o emen in o mal employmen has a lo o do wi h he ype o jobs c ea ed by
he manu ac u ing sec o . Figu e 12 clea ly shows ha mos jobs in he manu ac u ing
sec o a e o mal. Meanwhile, wo ke s in ag icul u e, commodi y, and esou ces
sec o s mainly hold in o mal employmen . Fo mal jobs end o ha e less ola ile
ea nings dynamics and a e be e paid han in o mal ones (Paz, 2014, Ulyssea, 2020,
Ok iyan o, 2024). The e o e, imp o emen in labo ma ke ou comes is mo e likely o
occu unde expansion in manu ac u ing expo s a he han commodi y ones.
Figu e 12: Fo mali y Spli by Sec o s
Sou ce: Au ho s’ calcula ion om Sake nas da ase s.
These esul s highligh he impo ance o main aining he manu ac u ing sec o ’s
compe i i eness. As a commodi y-dependen na ion, Indonesia is o en exposed o
commodi y boom and bus cycles. The indings om ou pape unde line ha a boom
d i en mainly by he ise in commodi y demand does no necessa ily ha e o lead o
wo sening labo ma ke ou comes as p edic ed by he Du ch disease amewo k. The
key he e is o main ain manu ac u ing expo s’ compe i i eness. This is no , by
any means, a new inding in his li e a u e. Howe e , ou pape is he i s o show
empi ically, in he case o Indonesia, ha indi iduals li ing in dis ic s mo e exposed o
manu ac u ing expo expansion a e be e o han hose li ing in dis ic s ha a e
hea ily commodi y d i en.
ADBI Wo king Pape 1481 R. Laksono e al.
28
Howe e , his does no mean ha we can o ally ule ou he ole o a commodi y expo
boom in keeping in o mali y and inequali y high du ing he boom pe iod (Coxhead
and Sh es ha 2016). A e all, he abili y o Indonesia’s manu ac u ing sec o o
p o ide o mal employmen showed a declining end du ing he boom pe iod o he
2000s (see Figu e 13). Un o una ely, he main ca ea o ou empi ical s a egy is ha
i is no designed o in e p e any agg ega e end a he na ional le el. Ou empi ical
speci ica ion, ins ead, can only cap u e he ela i e impac o expo expansion
ac oss di e en indi iduals wi h a ying exposu e le els. As such, explaining he
agg ega e end will equi e a mo e gene al equilib ium app oach a he han a
mic o-econome ic one.
6.3 Role o In e nal Mig a ion
In e nal mig a ion, which is he mo emen o people wi hin a na ion om one egion o
ano he , can impac income and job s a us in a ious ways. Wo ke s who eloca e o
high-g ow h a eas o en ind be e job oppo uni ies and equen ly ea n highe wages
due o he inc eased demand o wo ke s. In ligh o his, i is c ucial o examine
whe he mig a ion plays a ole in ou analysis.
Using da a om i e wa es o he Indonesia Family Li e Su ey (IFLS) and a s udy by
Pa dede, McCann, and Venho s (2020), we analyzed he numbe o in e nal mig an s
and ound a sligh change in he mig a ion a e wi h a dec easing end. On a e age,
he a e o in e nal mig a ion om 1993 o 1997 was 1.53%, which inc eased o 2.97%
om 1997 o 2000, hen dec eased o 2.03% om 2000 o 2007, and u he d opped
o 1.83% om 2007 o 2014. Looking a he mo emen by sub egional le els, he
1993–2014 da a show ha mig a ion was domina ed by in e -dis ic mo emen ,
ollowed closely by in e -subdis ic (kecama an) mo emen , while in e -p o incial
mo emen anked he lowes (see Table 12). The pa e n o 2000–2014 also shows a
dec easing end compa ed o 1993–2000, wi h in e -subdis ic mig a ion dec easing
om 0.86% o 0.71%, in e -dis ic mig a ion d opping om 0.84% o 0.74%, and
in e -p o incial mig a ion declining om 0.51% o 0.49%. Fu he analysis (by income
quan ile in Table 12) indica es ha he majo i y o mig an s come om highe -income
le els, wi h his end becoming mo e p onounced in he 2000–2014 pe iod han in
1993–2000, whe e mos mig an s we e om he weal hies 20% o he popula ion.
These igu es sugges ha du ing he pe iod analyzed, in e nal mig a ion a es may
no ha e signi ican ly con ibu ed o o e all labo ma ke changes. The indings om
Pa dede, McCann, and Venho s suppo his iew, showing a declining end in
in e -kecama an, in e -kabupa en, and in e -p o incial mig a ion a e he peak pe iod
o 1997–2000, indica ing ha in e nal mig a ion has become less equen o e ime.
Mo eo e , hey also poin ou ha Indonesia’s c ude mig a ion in ensi y (CMI) is
ela i ely low compa ed o o he coun ies, ein o cing he no ion ha in e nal mig a ion
migh no ha e a signi ican impac on expo -d i en labo ma ke ou comes. This
declining end sugges s ha e en wi h signi ican expo g ow h, mig a ion a es may
no necessa ily inc ease p opo iona ely, he eby educing he likelihood ha in e nal
mig a ion would signi ican ly impac labo ma ke ou comes.
ADBI Wo king Pape 1481 R. Laksono e al.
29
Table 12: Annual Pe cen age o Mig an s o In e -Kecama an
Wi hin a Kabupa en (Sub), In e -Kabupa en Wi hin a P o ince (Dis ),
and In e -P o ince (P o ), by Su ey Pe iod
A e age 1993–2014
A e age 1993–2000
A e age 2000–2014
Sub
Dis
P o
Sub
Dis
P o
Sub
Dis
P o
To al
0.78
0.79
0.50
0.86
0.84
0.51
0.71
0.74
0.49
Quin ile
Q1 (lowes 20% HH by income)
0.69
0.50
0.25
0.76
0.54
0.20
0.63
0.45
0.29
Q2
0.70
0.64
0.35
0.80
0.62
0.35
0.59
0.65
0.35
Q3
0.75
0.81
0.42
0.82
0.87
0.40
0.68
0.75
0.44
Q4
0.95
0.99
0.65
1.04
1.11
0.76
0.86
0.87
0.54
Q5
0.89
1.19
1.04
0.88
1.19
1.02
0.90
1.19
1.05
O igin (P e-mig a ion)
Suma e a
1.01
0.96
0.53
1.06
1.02
0.54
0.97
0.90
0.52
Ja a
0.65
0.70
0.60
0.69
0.78
0.63
0.61
0.63
0.57
O he s
0.89
0.83
0.19
1.08
0.80
0.16
0.70
0.85
0.22
A ea (P e-mig a ion)
U ban
0.85
0.99
0.66
0.92
1.08
0.72
0.78
0.91
0.61
Ru al
0.72
0.59
0.35
0.80
0.62
0.33
0.63
0.57
0.37
N
128,577
57,180
71,397
No e: (a) Calcula ion based on IFLS 1993, 1997, 2000, 2007, and 2014; (b) mig a ion: he numbe o people who
changed hei esidence be ween wo wa es o IFLS.
Sou ce: Pa dede, McCann, and Venho s (2020), ecalcula ed.
Fu he mo e, da a om wo majo islands (Suma e a and Ja a) in Table 12 show a
dec ease in all ypes o mig a ion, wi h only a sligh inc ease in in e -dis ic mo emen s
om o he islands. Howe e , he ep esen a ion o o he islands in he IFLS is minimal.
The u ban- o-u ban mig a ion end is s ill dominan o all ypes o mo emen s.
This dec easing pa e n sugges s ha he impac o he 2000–2014 expo expansion
did no signi ican ly al e he mig a ion pa e ns o Indonesian mig an s. A s udy by
Sugiya o, Deshingka , and McKay (2019) e eals ha in e nal mig a ion in Indonesia
p ima ily occu s a he indi idual le el, wi h he majo i y o mo emen s happening
wi hin p o inces. This sugges s ha mos in e nal mig a ion in ol es eloca ion wi hin
exis ing locali ies, p ima ily u ban- o-u ban o u al- o- u al, wi h limi ed c oss-p o incial
mig a ion. Howe e , he analysis ound ha he numbe o u al mig an s who mo ed
ac oss p o inces inc eased in 2000–2014 compa ed o 1993–2000. Pa dede, McCann,
and Venho s (2020) sugges ha in Suma a, u al esiden s a e mo e likely o mig a e
in e -p o incially han u ban esiden s. They also conclude ha mig a ion o igina ing
om u ban a eas was mo e signi ican han mig a ion om u al a eas in mos egions
du ing he pe iod 1993–2014. This does no align wi h ou esul s, which highligh
he impo ance o manu ac u ing du ing he expo expansion e a, sugges ing ha
mig a ion may play a seconda y ole in al e ing labo ma ke ou comes due o
expo expansion.
O e all, hese indings sugges ha while in e nal mig a ion can play a ole in labo
ma ke ou comes, pa icula ly in esponse o economic s abili y and expo g ow h,
i s in luence on speci ic labo ma ke ou comes due o expo expansion appea s
limi ed. The s udy by Au o e al. (2014) suppo s his idea, indica ing ha mig a ion’s
ole in shaping labo ma ke changes due o expo booms migh be limi ed. Thei
esea ch shows ha high-wage wo ke s a e mo e likely o eloca e in esponse o
ade exposu e, sugges ing ha mig a ion d i en by expo expansion ends o in ol e
indi iduals wi h mo e lexibili y and esou ces. This pa e n indica es ha mig a ion
ADBI Wo king Pape 1481 R. Laksono e al.
30
associa ed wi h expo g ow h may no include he b oade labo o ce, he eby
sugges ing a limi ed impac on he o e all labo ma ke ou comes.
Howe e , ou mig a ion analysis is based only on simple desc ip i e s a is ics and
does no in ol e causal and mechanism analysis. Fu he examina ion is needed o
de e mine whe he expo expansion impac s mig a ion and whe he mig a ion changes
ou esul s on o mal employmen oppo uni ies and ea nings g ow h.
6.4 Robus ness and Sensi i i y Tes
The immedia e conce n abou ou empi ical s a egy is whe he di e ences in labo
ma ke pe o mance a e d i en by sys ema ic di e ences in indi iduals’ cha ac e is ics
ac oss di e en exposu e si es. To assess his, we pe o m ou IV eg ession wi hin a
mo e limi ed sample o indi iduals wi h compa able cha ac e is ics ac oss exposu e
si es. So, i s ly, indi iduals li ing in dis ic s whe e exposu e o expo expansion is
highe han he 75 h pe cen ile a e assigned as he ea men g oup, while he es a e
he con ol g oup. Then, we pe o m he p opensi y sco e ma ching echnique using he
one- o-one nea es neighbo ma ching me hod o ma ch he ea ed obse a ions o
hei co esponding obse a ions in he con ol g oup. We selec ma ched indi iduals
based on hei o mali y s a us, eal yea ly income le el, educa ion le el, a he ’s
educa ional backg ound, gende , age, and li ing condi ions in he ini ial pe iod o 2000.
Figu es A1 and A2 o Appendix A show ha ai ly balanced samples a e achie ed om
ou ma ching p ocedu es.
Figu e 13: The Impac o Expo Expansion on Fo mali y and Ea nings G ow h:
2SLS Es ima ion, Ma ched Da ase s
Sou ce: Au ho s’ calcula ion.
Figu e 13 shows ha using only ma ched obse a ions, we s ill a i e a he same
conclusion as he main model: Expo expansion had boos ed indi iduals’ o mal
employmen oppo uni ies and ea nings g ow h by he end o 2014 in cumula i e e ms.
No ably, he impac on ea nings g ow h became la ge and s a is ically signi ican
(see Table A10 in Appendix A o he ull esul s). In addi ion, analysis using he
ma ched obse a ions also sugges s a simila p og essi i y s o y o ha in he main
esul s, whe e he enhancemen in o mal job oppo uni ies and ea nings g ow h due o
ADBI Wo king Pape 1481 R. Laksono e al.
31
expo expansion is p ima ily di ec ed owa ds people in he lowe - o middle-income
b acke (see Figu e 14). Howe e , he no able di e ence om he main esul s
(in Figu e 8) is ha in he ma ched da ase s, he impac s a e mo e concen a ed on he
middle-lowe ea nings le els and less so on he middle-uppe le els (see Tables A11
and A12 in Appendix A o he ull esul s).
Figu e 14: The Impac o Expo Expansion o he PRC by Ea nings Decile
in he Yea 2000: Ma ched Da ase s
Sou ce: Au ho s’ calcula ion.
Ano he sou ce o conce n comes om he exclusion es ic ion assump ion in ou IV
model. The s anda d Hansen J-s a is ics has been shown o be unable o p o ide a
de ini i e answe o he ul illmen o he exclusion es ic ion assump ion (Pa en e
and San os Sil a 2012). Ins ead o p o ing ha he assump ion is me , al e na i ely,
one can es whe he he conclusion emains obus when he exclusion es ic ion
assump ion is al e ed.
In his ega d, we ollow Conley, Hansen, and Rossi (2012) in se ing he ins umen s
as plausibly a he han s ic ly exogenous. This means delibe a ely allowing ou
ins umen o ha e a di ec e ec on he ou comes. The di ec e ec o IV is ob ained
om he subse o da a in which he impac o he ins umen does no di e om ze o
(insigni ican ) in he i s -s age eg ession (Van Kippe sluis and Rie eld 2018). This
subse o da a is o en called he “ze o- i s -s age g oup.” In ou case, he ze o- i s -
s age g oup is ob ained by ocusing on he dis ic s ha ha e a low le el o expo
expansion (below median) and specialize in ag icul u e and commodi y sec o s. In his
subse o da a, ou ea men a iable does no co ela e s a is ically wi h he
ins umen . F om his, we ake he coe icien o IV in he educed- o m eg ession as
he di ec impac o IV on ou come. We hen check whe he esul s based on he mo e
lexible assump ion di e om he main model. The esul s in Table 13 sugges ha
making he IV assump ion mo e lexible does no change he main conclusion: Expo
ADBI Wo king Pape 1481 R. Laksono e al.
32
expansion s ill leads o be e o mal employmen oppo uni ies and ea nings g ow h in
cumula i e e ms.
Table 13: The Impac o Expo Expansion o he PRC on Fo mal Employmen
and Ea nings G ow h: 2SLS Vs. Plausibly Exogenous Model
(1)
(2)
(3)
(4)
(5)
(6)
Fo mali y
Ea nings G ow h
2SLS
Plausibly
Exogenous
(Wi hou
Unce ain y)
Plausibly
Exogenous
(Wi h
Unce ain y)
2SLS
Plausibly
Exogenous
(Wi hou
Unce ain y)
Plausibly
Exogenous
(Wi h
Unce ain y)
Indonesia’s expo expansion 2000–2007,
2000 dis ic weigh (s anda dized)
0.384**
0.527***
0.527***
0.0746
0.0997**
0.0997*
[0.148]
[0.0881]
[0.0924]
[0.0513]
[0.0361]
[0.0438]
Obse a ions
6,901
6,911
6,911
4,406
4,412
4,412
R2
0.054
0.017
P o ince FE
Yes
Yes
Yes
Yes
Yes
Yes
Co a ia es
Yes
Yes
Yes
Yes
Yes
Yes
Robus F-S a
33.00
36.04
No e: We es whe he esul s change when iola ion o exclusion es ic ion assump ion is allowed. Regions whe e
expo expansion is below he median (p50) and mo e commodi y elian a e g ouped as he ze o- i s -s age g oup. In
hese egions, Indonesia’s expo expansion o he PRC does no co ela e s a is ically wi h ha o ASEAN coun ies.
Thus, a educed- o m coe icien can be aken as he di ec impac o IV on ou come. The di ec -e ec coe icien se es
as he le el o exclusion es ic ion iola ion in ou sensi i i y es . The plausibly exogenous IV model co ec s o a
po en ial di ec e ec o IV on ou come. The model wi h unce ain y includes s anda d e o s o he di ec impac o IV on
ou come om he educed- o m eg essions, while he one wi hou unce ain y assumes no de ia ion om he le el o
iola ion. Signi icance: + p < 0.10, * p < 0.05, ** p < 0.01, *** p < 0.001.
Sou ce: Au ho s’ calcula ion.
Nex , we examine whe he ou main es ima e is sensi i e o al e na i e speci ica ions
and choice o da a. In pa icula , we modi y h ee aspec s o ou main model. Fi s , as
ega ds IV, we expe imen wi h wo al e na i es: (i) we add a new ins umen , which is
he expo s o selec ed La in Ame ican coun ies o he PRC;17 and (ii) we combine
bo h ASEAN and La in Ame ica’s expo o he PRC as a join ins umen . The second
modi ica ion is on he co a ia es. The e is conce n ha ou o mal employmen
p ospec s migh be d i en by he ini ial end ha was unde way be o e he PRC’s
shock. In his ega d, we use o mal employmen g ow h om 1997 o 2000 as ou
dis ic -le el con ol a iable ins ead o adable employmen g ow h. This will minimize
he es ima e in ou o mali y analysis being con amina ed by o mal job g ow h ends a
he dis ic le el. Las ly, we exclude dis ic s wi h incomple e in o ma ion om Sake nas
in ce ain yea s, a he han impu ing i wi h sec o al employmen s uc u e om he
closes a ailable yea .
Figu e 15 shows ha he impac o expo expansion emains consis en . Exposu e o
expo expansion o he PRC imp o es o mal employmen ou comes and ea nings
g ow h among indi iduals li ing in he mo e exposed dis ic s. Howe e , he impac o
expo expansion on o al ea nings g ow h is only s a is ically signi ican when using
wo IVs (which a e ASEAN and La in Ame ican expo s o he PRC). The p og essi i y
s o y is also main ained when incomple e da a a e excluded om ou analysis a he
han impu ed (see Figu e 16). In gene al, hese esul s sugges ha ou main indings
a e ela i ely obus as hey su i e a ious obus ness and sensi i i y checks.
17 The La in Ame ican coun ies include A gen ina, B azil, Chile, Mexico, Pa aguay, Pe u, U uguay, and
Venezuela. They we e also he ounding membe s o he WTO in 1995.
ADBI Wo king Pape 1481 R. Laksono e al.
33
Figu e 15: Sensi i i y Analysis
Sou ce: Au ho s’ calcula ion.
Figu e 16: He e ogenei y Analysis, Sample Excludes Missing Da a
Sou ce: Au ho s’ calcula ion.
ADBI Wo king Pape 1481 R. Laksono e al.
34
7. CONCLUSIONS AND IMPLICATIONS
De eloping economies’ pa icipa ion in he expo ma ke has expanded conside ably in
he las wo o h ee decades. Howe e , he e is no clea e idence ha his has
imp o ed labo ma ke ou comes. In o mali y is s ill pe sis en ly high, and inequali y, in
a b oade sense, has isen in many pa s o de eloping economies. In addi ion, some
s udies ha e linked commodi y-d i en expo expansion wi h he Du ch disease e ec ,
a guing ha expo expansion will no necessa ily lead o imp o emen in labo ma ke
pe o mance as i could simul aneously weaken he manu ac u ing sec o , which is he
main p o ide o o mal jobs in he economy.
We e isi his issue by s udying he expo expansion episode o a majo commodi y-
dependen na ion, namely Indonesia. Ra he han ocusing only on commodi y expo s,
we measu e all expo changes in adable goods. To isola e exogenous a ia ion in
Indonesia’s expo , we ocus on Indonesia’s expo expansion o he PRC be ween
2000 and 2007, as his pe iod ep esen s he ime when he PRC d ama ically ose as
a majo impo e in he wo ld’s economy ollowing i s accession o he WTO. This
exogenous impo demand shock in he PRC has inc eased expo s no only om
Indonesia bu also om o he de eloping coun ies in Asian and La in Ame ican
egions. We hen assess he impac o his expo expansion o he PRC on indi iduals’
labo ma ke ou comes, which we ob ained om he IFLS da abase. In pa icula , we
compa e he o al numbe o yea s spen in o mal employmen and ea nings g ow h
om 2000 o 2014 o indi iduals who li e in dis ic s wi h la ge exposu e o expo
expansion o he PRC ela i e o hose in less exposed ones. We u he gauge how
equal his expo expansion has been by analyzing he he e ogeneous impac o expo
expansion ac oss indi iduals wi h di e en posi ions in e ms o income dis ibu ion.
We disco e ha indi iduals li ing in dis ic s wi h g ea e exposu e o expo expansion
o he PRC be ween 2000 and 2007 ended o ha e la ge o mal employmen
p ospec s in cumula i e e ms. The o e all impac on o al ea nings g ow h is also
posi i e bu no s a is ically signi ican . We also ind ha he impac o expo expansion
has been ela i ely p og essi e as imp o emen s in o mal job oppo uni ies and
ea nings g ow h induced by expo s a e di ec ed mos ly owa ds indi iduals in he
lowe - and middle-income b acke s. These esul s emain in ac e en when he
ins umen is assumed o be weak and iola es he exclusion es ic ion assump ion.
In e ence does no change ei he as we expe imen wi h di e en speci ica ions, da a
ea men echniques, and IV cons uc ions.
These esul s a e mainly unde pinned by he e ec o manu ac u ing expo expansion.
Due o he PRC’s eme gence in he global economy, Indonesia expe ienced no only
a subs an ial inc ease in he expo o commodi ies bu also a meaning ul g ow h in
he expo o manu ac u ed p oduc s. We disco e ha he posi i e impac o expo
expansion on o mal job oppo uni ies and ea nings g ow h is mos ly concen a ed in
dis ic s wi h g ea e specializa ion in manu ac u ing ac i i ies, whe eas he e appea s
o be no s a is ically signi ican e ec o indi iduals in commodi y- elian dis ic s. This
a guably ela es o he na u e o he manu ac u ing sec o , which ends o abso b
mo e o mal a he han in o mal employmen . Fo mal jobs end o be mo e secu e and
pay a be e sala y. Unde s andably, imp o emen in labo ma ke ou comes is mo e
likely o occu unde expansion in manu ac u ing expo s a he han commodi y ones.
These indings highligh he impo ance o main aining he manu ac u ing sec o ’s
compe i i eness in a commodi y-dependen na ion like Indonesia as a sou ce o
imp o e labo ma ke pe o mance.
ADBI Wo king Pape 1481 R. Laksono e al.
35
Howe e , he main ca ea o ou empi ical s a egy is ha i is no designed o in e p e
any agg ega e end a he na ional le el. The esea ch design employed by his s udy
can only answe he ela i e impac o expo ac oss indi iduals li ing in di e en
exposu e si es. This means we canno link he ising ole o commodi y expo du ing
an expo boom pe iod wi h he PRC and he esul ing high in o mali y and inequali y a
ha ime. Explaining hese agg ega e ends, in ou iew, equi es a mo e gene al
equilib ium app oach a he han a mic o-econome ic one. This could be a p omising
a enue o u u e esea ch. Ano he limi a ion o his pape is ha he empi ical design
holds indi iduals’ esidences ixed in he ini ial pe iod be o e he PRC’s accession o
he WTO. Al hough his is needed o a oid so ing e ec s, i canno explain he
ques ion o labo mobili y as a esul o a majo expo shock. We show ha he ole o
in e nal mig a ion in ou da a appea s o be limi ed and less likely o al e he in e ence.
This is due o i s small magni ude and declining end o e ime. Howe e , his is based
pu ely on desc ip i e wo ks and does no answe he ques ion as o whe he o no
expo induces wo ke s o mo e ac oss egions and sec o s – ano he opic ha has
been he co e o ade heo y ye emains an open empi ical puzzle.
ADBI Wo king Pape 1481 R. Laksono e al.
36
REFERENCES
Acemoglu, D., D. Au o , D. Do n, G. H. Hanson, and B. P ice. 2016. Impo Compe i ion
and he G ea US Employmen Sag o he 2000s. Jou nal o Labo Economics
34: S141–S198.
And ews, I. 2018. Valid Two-S ep Iden i ica ion-Robus Con idence Se s o GMM.
The Re iew o Economics and S a is ics 100: 337–348.
And ews, I., J. H. S ock, and L. Sun. 2019. Weak Ins umen s in Ins umen al Va iables
Reg ession: Theo y and P ac ice. Annual Re iew o Economics 11: 727–753.
Ang is , J., and M. Kolesá , 2024. One Ins umen o Rule hem all: The Bias and
Co e age o Jus -ID IV. Jou nal o Econome ics 240: 105398.
A agón, F. M., and J. P. Rud, 2013. Na u al Resou ces and Local Communi ies:
E idence om a Pe u ian Gold Mine. Ame ican Economic Jou nal: Economic
Policy 5: 1–25.
A anasio, O., P. K. Goldbe g, and N. Pa cnik. 2004. T ade Re o ms and Wage
Inequali y in Colombia. Jou nal o De elopmen Economics 74: 331–366.
Au o , D. H. 2018. T ade and Labo Ma ke s: Lessons om China’s ise. IZA Wo ld o
Labo 2018: 431.
Au o , D. H., D. Do n, and G. H. Hanson. 2013. The China Synd ome: Local labo
Ma ke E ec s o Impo Compe i ion in he Uni ed S a es. Ame ican Economic
Re iew 103: 2121–2168.
Au o , D. H., D. Do n, and G. H. Hanson. 2016. The China Shock: Lea ning om
Labo -Ma ke Adjus men o La ge Changes in T ade. Annual Re iew o
Economics 8: 205–240.
Au o , D. H., D. Do n, G. H. Hanson, and J. Song. 2014. T ade Adjus men : Wo ke
Le el E idence. The Qua e ly Jou nal o Economics. Ox o d Uni e si y P ess.
Bus os, P. 2011. T ade Libe aliza ion, Expo s, and Technology Upg ading: E idence
on he Impac o MERCOSUR on A gen inian Fi ms. Ame ican Economic
Re iew 101: 304–340.
Conley, T. G., C. B. Hansen, and P. E. Rossi. 2012. Plausibly Exogenous. The Re iew
o Economics and S a is ics 94: 260–272.
Co den, W. M., and J. P. Nea y. 1982. Booming Sec o and De-Indus ialisa ion in a
Small Open Economy. The Economic Jou nal 92: 825–848.
Cos a, F., J. Ga ed, and J. P. Pessoa. 2016. Winne s and Lose s om a
Commodi ies- o -Manu ac u es T ade Boom. Jou nal o In e na ional Economics
102: 50–69.
Coxhead, I., and R. Sh es ha. 2016. Could a Resou ce Expo Boom Reduce Wo ke s’
Ea nings? The Labou -Ma ke Channel in Indonesia. Bulle in o Indonesian
Economic S udies 52: 185–208.
Dao, M. C., M. Das, and Z. Koczan. 2019. Why is Labou Recei ing a Smalle Sha e o
Global Income? Economic Policy 34: 723–759.
Dix-Ca nei o, R., and B. K. Ko ak. 2019. Ma gins o Labo Ma ke Adjus men o T ade.
Jou nal o In e na ional Economics 117: 125–142.
ADBI Wo king Pape 1481 R. Laksono e al.
43
Table A6: The Impac o Expo Expansion o he PRC on Fo mal Employmen by Decile o Ea nings: 2SLS Es ima ion,
Full Resul s
(10)
10 h
–
0.0232
[0.102]
0.189+
[0.111]
0.128*
[0.0575]
0.0610*
[0.0292]
0.0716
[0.162]
–
0.254
[0.250]
–
0.108+
[0.0631]
0.397
[0.286]
0.891**
[0.290]
0.377
[0.329]
0.212
[0.315]
0.280
[0.292]
0.264
[0.299]
0.329
[0.274]
con inued on nex page
(9)
9 h
0.0177
[0.0911]
0.0243
[0.100]
–
0.109+
[0.0642]
–
0.0484
[0.0599]
0.166
[0.136]
–
0.425*
[0.199]
0.0267
[0.0542]
0.131
[0.312]
–
0.245
[0.402]
–
0.667*
[0.312]
0.0870
[0.427]
0.0929
[0.285]
0.371
[0.369]
0.557+
[0.305]
(8)
8 h
0.00964
[0.174]
0.133
[0.115]
–
0.138*
[0.0548]
0.154***
[0.0456]
–
0.205+
[0.124]
–
0.398**
[0.128]
–
0.0701
[0.0516]
0.465+
[0.259]
0.249
[0.295]
–
0.266
[0.362]
0.262
[0.527]
0.371+
[0.222]
0.105
[0.246]
0.609**
[0.233]
(7)
7 h
0.870***
[0.231]
0.122
[0.116]
–
0.129*
[0.0599]
0.104*
[0.0420]
0.0972
[0.119]
–
0.492*
[0.221]
0.121
[0.107]
–
0.295
[0.282]
–
0.267
[0.458]
–
0.536+
[0.311]
–
2.569*
[1.293]
–
0.0179
[0.264]
–
0.00842
[0.301]
0.181
[0.286]
(6)
6 h
0.894**
[0.297]
0.165
[0.125]
–
0.157**
[0.0504]
0.0888+
[0.0525]
0.0768
[0.131]
–
0.118
[0.157]
0.0916
[0.0947]
–
0.0580
[0.285]
–
0.221
[0.221]
–
0.326*
[0.161]
–
1.602*
[0.817]
–
0.00166
[0.232]
0.351
[0.240]
0.290+
[0.173]
(5)
5 h
0.820**
[0.275]
0.302**
[0.0922]
–
0.129**
[0.0482]
0.0602
[0.0589]
–
0.0473
[0.114]
–
0.254+
[0.136]
0.0881
[0.113]
0.326
[0.376]
0.0217
[0.385]
0.0354
[0.295]
–
2.299
[1.595]
0.388
[0.278]
0.278
[0.282]
0.568*
[0.271]
(4)
4 h
0.729***
[0.201]
–
0.0350
[0.0724]
–
0.115**
[0.0350]
0.0979*
[0.0405]
–
0.0587
[0.0816]
–
0.00149
[0.110]
–
0.0199
[0.0394]
0.0392
[0.287]
0.0918
[0.280]
–
0.0156
[0.288]
–
1.684*
[0.834]
0.270
[0.261]
0.252
[0.248]
0.145
[0.271]
(3)
3 d
0.524**
[0.165]
0.351***
[0.0973]
–
0.104**
[0.0345]
0.109+
[0.0601]
0.239***
[0.0689]
–
0.246*
[0.111]
–
0.0161
[0.0350]
–
0.361
[0.249]
–
0.104
[0.274]
–
0.390
[0.268]
–
1.182
[0.875]
–
0.134
[0.242]
–
0.204
[0.230]
–
0.000168
[0.250]
(2)
2nd
0.370+
[0.218]
0.149+
[0.0893]
–
0.111**
[0.0404]
0.0566
[0.0583]
–
0.107
[0.0830]
–
0.285**
[0.107]
–
0.0894**
[0.0340]
–
0.190
[0.505]
–
0.245
[0.477]
–
0.200
[0.495]
–
1.371
[1.011]
0.0186
[0.486]
–
0.0186
[0.486]
0.0267
[0.502]
(1)
1s
0.375
[0.243]
0.299***
[0.0610]
–
0.0648**
[0.0224]
0.0355
[0.0340]
–
0.0118
[0.0529]
–
0.0704
[0.0535]
–
0.00245
[0.0281]
0.241*
[0.119]
0.0476
[0.0727]
0.0262
[0.0751]
–
0.353
[0.657]
0.112
[0.0810]
0.180**
[0.0669]
0.0800
[0.136]
Indonesia’ s expo expansion 2000–
2007,
2000 dis ic weigh (s anda dized)
Gende , 1 = male, 0 = emale
Age (yea s) in 2000 (s anda dized)
Fa he ’ s yea s o educa ion in 2000
(s anda dized)
Su icien en ila ion in 2000, 1 = yes, 0 = no
Piles o ash a ound he house in 2000,
1 = yes, 0 = no
Dis ic ’ s adable employmen , cumula i e
annual g ow h 1997–
2000 (s anda dized)
Suma e a Ba a
Suma e a Sela an
Lampung
DKI Jaka a
Jawa Ba a
Jawa Tengah
Yogyaka a
ADBI Wo king Pape 1481 R. Laksono e al.
44
Table A6
con inued
(10)
10 h
0.307
[0.275]
0.516*
[0.260]
0.769**
[0.293]
0.301
[0.335]
0.375
[0.301]
0.281
[0.283]
1.186***
[0.311]
0.312
[0.289]
533
0.071
112.8
–
0.227
0.178
–
0.223
0.177
No e: S anda d e o s a e p o ided in b acke s and a e clus e ed wi hin dis ic . The model uses expo o ASEAN egion o he PRC as he ins umen , which includes he ollowing
coun ies: B unei Da ussalam, Singapo e, Myanma , Malaysia, he Philippines, and Thailand. Indi idual-
le el da a co e all adul indi iduals ha exis ac oss he h ee la es IFLS
wa es: 2000, 2007, and 2014 (balanced panel). Con inuous a iables a e ans o med in o s anda dized a iables wi h mean = 0 and s anda d de ia ion = 1. Co a ia es a e used
ac oss all es ima ions. The S ock
-
Yogo (2005) c i ical alue wi h 10% maximal bias is 16.38, while he sugges ed minimum alue o F
-s
a ha is obus o he e oscedas ici y, se ial
co ela ion, and clus e ing p oblems (e ec i e F
-
s a ) is 23.1. Con idence se s (CS) a e based on 1
,000 g
id poin s in he in e al o [
–
0.5, 2]. Robus con idence se s a e based on he
Ande son
-
Rubin (AR) es and obus o he e oskedas ici y and clus e ing issues. Wald con idence se s a e based on 2SLS es ima es and a e no obus o weak ins umen s.
Signi icance: +
p
< 0.10, *
p
< 0.05, **
p
< 0.01, ***
p
< 0.001.
(9)
9 h
0.326
[0.319]
–
0.166
[0.454]
0.553+
[0.330]
0.283
[0.394]
0.471
[0.416]
–
0.938**
[0.316]
0.495+
[0.296]
473
0.066
73.68
–
0.167
0.198
–
0.161
0.196
(8)
8 h
0.241
[0.247]
0.129
[0.370]
0.0346
[0.293]
–
0.543*
[0.270]
–
0.500+
[0.274]
0.413+
[0.230]
–
0.661
[0.655]
0.356
[0.290]
487
0.133
33.93
–
0.432
0.300
–
0.331
0.350
(7)
7 h
0.116
[0.283]
–
0.877**
[0.281]
–
0.0442
[0.300]
–
0.482
[0.373]
–
0.914*
[0.396]
1.708***
[0.331]
0.507*
[0.258]
645
–
0.202
21.70
0.501
1.539
0.417
1.323
(6)
6 h
0.265
[0.182]
0.105
[0.320]
–
0.0442
[0.353]
–
0.875
[0.608]
0.117
[0.353]
–
1.619*
[0.654]
0.178
[0.198]
533
–
0.101
18.88
0.376
1.7
0.312
1.476
(5)
5 h
0.460+
[0.266]
0.0412
[0.405]
0.254
[0.260]
–
0.0726
[0.485]
–
0.362
[0.337]
–
0.158
[0.280]
474
–
0.137
22.52
0.393
1.63
0.281
1.359
(4)
4 h
0.0859
[0.245]
–
0.0580
[0.327]
–
0.142
[0.245]
–
0.422
[0.452]
–
0.307
[0.362]
0.962***
[0.236]
0.0722
[0.239]
636
–
0.115
17.48
0.426
1.372
0.336
1.122
(3)
3 d
–
0.136
[0.247]
–
0.600*
[0.263]
–
0.00943
[0.230]
–
0.388
[0.403]
–
0.162
[0.304]
–
1.272***
[0.307]
–
0.217
[0.223]
539
–
0.024
52.09
0.166
0.836
0.201
0.848
(2)
2nd
0.256
[0.498]
0.102
[0.493]
–
0.0517
[0.493]
0.673
[0.709]
–
0.148
[0.502]
–
0.0617
[0.493]
301
0.067
8.199
–
0.14
1.004
–
0.058
0.798
(1)
1s
0.0609
[0.0751]
0.279**
[0.107]
0.0371
[0.0776]
–
0.197
[0.278]
0.0128
[0.177]
–
0.544***
[0.103]
777
–
0.041
8.828
0.041
1.544
–
0.102
0.852
Jawa Timu
Bali
NTB
Kalsel
Sulsel
Riau
Kal eng
Cons an
Obse a ions
R2
Kleibe gen-
Paap F
-
S a
Robus CS (lowe bound)
Robus CS (uppe bound)
Non obus (Wald) CS (lowe bound)
Non obus (Wald) CS (uppe bound)
ADBI Wo king Pape 1481 R. Laksono e al.
45
Table A7: The Impac o Expo Expansion o he PRC on Ea nings G ow h by Decile o Ea nings: 2SLS Es ima ion,
Full Resul s
(10)
10 h
–
0.0243
[0.131]
0.0532
[0.111]
0.154*
[0.0647]
0.0586
[0.0387]
0.121
[0.131]
–
0.373
[0.280]
–
0.00799
[0.0674]
0.129
[0.272]
0.548*
[0.238]
–
0.0498
[0.225]
0.211
[0.385]
0.219
[0.241]
–
0.229
[0.328]
0.169
[0.241]
con inued on nex page
(9)
9 h
0.215**
[0.0670]
–
0.196*
[0.0782]
–
0.0462
[0.0401]
–
0.0440
[0.0509]
0.0941
[0.113]
–
0.0517
[0.144]
–
0.0110
[0.0307]
0.245
[0.231]
–
0.103
[0.313]
–
0.153
[0.220]
–
0.202
[0.330]
0.0710
[0.179]
0.279
[0.247]
0.251
[0.207]
(8)
8 h
0.272
[0.198]
0.139
[0.0957]
–
0.0259
[0.0353]
0.0806*
[0.0361]
0.194*
[0.0965]
–
0.450*
[0.180]
0.0635
[0.0582]
–
0.0558
[0.185]
–
0.0225
[0.231]
–
0.100
[0.226]
–
0.736
[0.658]
–
0.0628
[0.155]
–
0.370+
[0.191]
0.224
[0.182]
(7)
7 h
0.376*
[0.151]
0.129
[0.0912]
–
0.0929*
[0.0405]
0.0341
[0.0354]
0.206
[0.132]
–
0.171
[0.124]
0.0337
[0.0532]
–
0.486***
[0.135]
–
0.373**
[0.141]
–
0.366*
[0.163]
–
1.362+
[0.732]
–
0.437***
[0.126]
–
0.466***
[0.119]
–
0.244*
[0.123]
(6)
6 h
0.404+
[0.245]
0.0986
[0.112]
–
0.116**
[0.0447]
0.0230
[0.0302]
0.125
[0.124]
–
0.359*
[0.160]
–
0.0413
[0.0377]
0.130
[0.143]
–
0.0987
[0.153]
–
0.104
[0.125]
–
1.185
[0.769]
–
0.166
[0.150]
–
0.169
[0.152]
–
0.141
[0.137]
(5)
5 h
0.767***
[0.217]
0.276**
[0.0950]
–
0.112**
[0.0414]
–
0.00823
[0.0438]
0.231*
[0.109]
–
0.111
[0.138]
0.0313
[0.0656]
–
0.00646
[0.271]
0.485**
[0.174]
0.121
[0.274]
–
1.997
[1.359]
0.0210
[0.177]
–
0.142
[0.201]
0.162
[0.159]
(4)
4 h
0.444
[0.270]
0.314**
[0.0986]
–
0.0706
[0.0493]
0.116**
[0.0442]
–
0.000223
[0.118]
0.0971
[0.119]
–
0.00288
[0.0340]
–
0.0721
[0.426]
0.162
[0.136]
0.0648
[0.172]
–
0.441
[0.707]
–
0.200
[0.154]
–
0.293+
[0.164]
–
0.161
[0.203]
(3)
3 d
0.581***
[0.173]
0.466***
[0.112]
–
0.115**
[0.0432]
0.0601
[0.0641]
0.384***
[0.0994]
–
0.0198
[0.101]
–
0.0822**
[0.0270]
–
0.167
[0.316]
0.0874
[0.300]
–
0.889**
[0.292]
–
1.271
[0.786]
–
0.789**
[0.302]
–
0.910***
[0.274]
–
0.379
[0.287]
(2)
2nd
0.453+
[0.254]
0.156
[0.125]
–
0.138*
[0.0644]
0.181+
[0.101]
0.238
[0.145]
–
0.240
[0.215]
–
0.0533
[0.0449]
–
1.026***
[0.254]
–
0.822***
[0.202]
–
1.028***
[0.271]
–
1.154
[0.721]
–
0.786***
[0.203]
–
0.988***
[0.163]
–
0.911***
[0.203]
(1)
1s
0.375
[0.360]
–
0.150
[0.123]
–
0.122
[0.0743]
0.0229
[0.0425]
–
0.00233
[0.137]
–
0.265
[0.191]
–
0.0805+
[0.0460]
–
0.136
[0.250]
0.103
[0.274]
–
0.564
[0.474]
–
1.312
[0.950]
0.201
[0.268]
–
0.202
[0.255]
0.132
[0.244]
Indonesia’ s expo expansion 2000–
2007,
2000 dis ic weigh (s anda dized)
Gende , 1 = male, 0 = emale
Age (yea s) in 2000 (s anda dized)
Fa he ’ s yea s o educa ion in 2000
(s anda dized)
Su icien en ila ion in 2000, 1 = yes, 0 = no
Piles o ash a ound he house in 2000,
1 = yes, 0 = no
Dis ic ’ s adable employmen , cumula i e
annual g ow h 1997–
2000 (s anda dized)
Suma e a Ba a
Suma e a Sela an
Lampung
DKI Jaka a
Jawa Ba a
Jawa Tengah
Yogyaka a
ADBI Wo king Pape 1481 R. Laksono e al.
46
Table A7 con inued
(10)
10 h
–
0.0229
[0.274]
0.472+
[0.264]
0.338
[0.236]
0.222
[0.277]
–
0.104
[0.305]
–
0.0288
[0.237]
1.119**
[0.384]
–
0.663**
[0.250]
469
0.089
79.50
–
0.277
0.248
–
0.282
0.233
No e: S anda d e o s a e p o ided in b acke s and a e clus e ed wi hin dis ic . The model uses expo o ASEAN egion o he PRC as he ins umen , which includes he ollowing
coun ies: B unei Da ussalam, Singapo e, Myanma , Malaysia, he Philippines, and Thailand. Indi idual-
le el da a co e all adul indi iduals ha exis ac oss he h ee la es IFLS
wa es: 2000, 2007, and 2014 (balanced panel). Con inuous a iables a e ans o med in o s anda dized a iables wi h mean = 0 and s anda d de ia ion = 1. Co a ia es a e used ac oss
all es ima ions. The S ock
-
Yogo (2005) c i ical alue wi h 10% maximal bias is 16.38, while he sugges ed minimum alue o F
-
s a ha is obus o he e oscedas ici y, se ial co ela ion,
and clus e ing p oblems (e ec i e F
-
s a ) is 23.1. Con idence se s (CS) a e based on 1
,
000 g id poin s in he in e al o [
–
0.5, 2]. Robus con idence se s a e based on he Ande son-
Rubin (AR) es and obus o he e oskedas ici y and clus e ing issues. Wald con idence se s a e based on 2SLS es ima es and a e no obus o weak ins umen s. Signi icance:
+ p <
0.10, *
p
< 0.05, **
p
< 0.01, ***
p
< 0.001.
(9)
9 h
0.106
[0.192]
0.110
[0.202]
0.253
[0.194]
0.210
[0.208]
0.507*
[0.203]
–
0.175
[0.313]
–
0.266
[0.185]
425
0.047
83.52
0.066
0.333
0.083
0.346
(8)
8 h
–
0.146
[0.168]
–
0.433*
[0.190]
–
0.0421
[0.250]
–
0.304
[0.212]
–
0.158
[0.291]
0.208
[0.164]
–
0.315+
[0.169]
418
0.070
32.56
–
0.235
0.604
–
0.116
0.659
(7)
7 h
–
0.441***
[0.128]
–
0.469*
[0.190]
–
0.653*
[0.256]
–
0.341+
[0.187]
–
0.000502
[0.269]
–
0.0732
[0.210]
–
0.0793
[0.163]
554
–
0.045
22.93
0.106
0.759
0.08
0.672
(6)
6 h
–
0.206
[0.167]
–
0.174
[0.359]
–
0.163
[0.140]
–
0.387
[0.430]
–
0.402
[0.348]
–
0.285
[0.234]
–
0.000619
[0.199]
458
–
0.018
19.74
–
0.03
1.052
–
0.076
0.884
(5)
5 h
0.0862
[0.146]
–
0.417*
[0.176]
0.292+
[0.161]
–
0.273
[0.375]
–
0.298
[0.237]
–
0.233
[0.161]
391
–
0.140
27.07
0.406
1.342
0.343
1.192
(4)
4 h
–
0.304+
[0.181]
–
0.150
[0.206]
–
0.155
[0.277]
–
0.144
[0.280]
–
0.369
[0.267]
0.306+
[0.185]
498
0.065
23.26
–
0.072
1.084
–
0.086
0.973
(3)
3 d
–
0.437
[0.269]
–
0.442
[0.303]
–
0.385
[0.261]
–
0.900*
[0.456]
–
0.461+
[0.269]
–
0.672*
[0.327]
0.685**
[0.263]
395
0.143
30.71
0.208
0.929
0.241
0.92
(2)
2nd
–
0.331
[0.289]
–
0.669**
[0.234]
–
0.390***
[0.117]
–
0.662+
[0.355]
–
1.127***
[0.302]
2.165***
[0.233]
206
0.122
14.95
–
0.067
1.067
–
0.044
0.95
(1)
1s
0.289
[0.268]
0.169
[0.355]
0.381
[0.248]
–
0.117
[0.384]
0.297
[0.308]
–
0.0120
[0.266]
240
0.056
5.612
–
0.213
2.618
–
0.33
1.08
Jawa Timu
Bali
NTB
Kalsel
Sulsel
Riau
Kal eng
Cons an
Obse a ions
R2
Kleibe gen-
Paap F
-
S a
Robus CS (lowe bound)
Robus CS (uppe bound)
Non obus (Wald) CS (lowe bound)
Non obus (Wald) CS (uppe bound)
ADBI Wo king Pape 1481 R. Laksono e al.
47
Table A8: The He e ogeneous Impac o Expo Expansion o he PRC on Fo mal Employmen : 2SLS Es ima ion,
Full Resul s
(11)
Ja a
Island
0.333*
[0.147]
0.553***
[0.0438]
–
0.0809***
[0.0156]
0.0530***
[0.0157]
0.117*
[0.0482]
–
0.230***
[0.0680]
–
0.0320
[0.0419]
0.660
[0.500]
0.754
[0.509]
con inued on nex page
(10)
Non-
Ja a
Islands
0.589*
[0.291]
0.568***
[0.0511]
0.00504
[0.0242]
0.120***
[0.0228]
0.0861
[0.0524]
–
0.217***
[0.0588]
0.0882*
[0.0414]
0.0550
[0.120]
–
0.484
[0.312]
–
0.0876
[0.151]
–
0.228+
[0.135]
(9)
High le el
-
0.154+
[0.0842]
0.0700
[0.0962]
0.184***
[0.0477]
0.00803
[0.0272]
0.131
[0.170]
0.234
[0.215]
–
0.0212
[0.0376]
0.294
[0.303]
–
1.231***
[0.270]
0.0784
[0.342]
0.319
[0.385]
0.159
[0.334]
0.249
[0.255]
0.405
[0.282]
(8)
Mid le el
0.217
[0.151]
0.755***
[0.0503]
0.00254
[0.0234]
0.0615***
[0.0169]
0.0494
[0.0497]
–
0.264***
[0.0708]
0.0260
[0.0326]
0.143
[0.100]
–
0.00168
[0.313]
0.0774
[0.151]
–
0.109
[0.254]
–
0.110
[0.421]
0.273**
[0.0849]
0.213*
[0.0960]
(7)
Low le el
0.461**
[0.146]
0.341***
[0.0385]
–
0.0442**
[0.0158]
0.00327
[0.0256]
–
0.0339
[0.0386]
–
0.0996*
[0.0498]
0.0787
[0.0518]
–
0.0671
[0.154]
–
0.496***
[0.150]
–
0.241
[0.180]
–
0.275
[0.172]
–
1.352+
[0.702]
–
0.141
[0.159]
0.0250
[0.172]
(6)
Se ices
0.252**
[0.0808]
0.436***
[0.0448]
–
0.0442*
[0.0225]
0.0672**
[0.0211]
0.119*
[0.0563]
–
0.428***
[0.0702]
–
0.00788
[0.0296]
0.0753
[0.187]
–
1.002***
[0.196]
0.0634
[0.221]
–
0.281
[0.259]
–
0.543
[0.350]
–
0.0558
[0.165]
–
0.00662
[0.169]
(5)
Manu ac u ing
0.509*
[0.218]
0.676***
[0.0871]
–
0.114**
[0.0348]
0.00437
[0.0296]
0.0470
[0.0893]
–
0.0103
[0.155]
0.103
[0.0718]
–
0.331
[0.256]
–
0.221
[0.213]
–
0.326
[0.252]
–
0.329
[0.268]
–
1.062
[0.781]
0.203
[0.208]
0.0603
[0.227]
(4)
Ag icul u e
and Mining
1.595+
[0.850]
0.236***
[0.0552]
–
0.00209
[0.0315]
0.0690
[0.0452]
0.0886
[0.0618]
–
0.161*
[0.0664]
–
0.0396
[0.0713]
0.0947
[0.315]
0.674
[0.551]
0.0940
[0.322]
–
0.163
[0.312]
–
8.435+
[4.816]
–
0.123
[0.285]
0.00289
[0.301]
(3)
Male
0.608***
[0.166]
–
0.0670**
[0.0213]
0.0277
[0.0220]
0.192***
[0.0485]
–
0.412***
[0.0747]
–
0.0123
[0.0477]
0.128
[0.133]
–
0.327
[0.302]
0.0922
[0.269]
–
0.369*
[0.172]
–
1.093
[0.697]
0.104
[0.123]
0.103
[0.142]
(2)
Female
0.220
[0.134]
–
0.0316*
[0.0159]
0.123***
[0.0169]
0.0446
[0.0361]
–
0.103*
[0.0446]
0.0142
[0.0441]
0.0532
[0.110]
–
0.317
[0.270]
–
0.154+
[0.0918]
–
0.145
[0.151]
–
0.488
[0.437]
–
0.0108
[0.0903]
0.159
[0.105]
(1)
Baseline
0.384**
[0.148]
0.560***
[0.0330]
–
0.0450**
[0.0140]
0.0799***
[0.0129]
0.111**
[0.0358]
–
0.241***
[0.0462]
0.00141
[0.0418]
0.0910
[0.103]
–
0.314
[0.230]
–
0.0455
[0.147]
–
0.263+
[0.152]
–
0.749
[0.545]
0.0394
[0.0913]
0.133
[0.100]
Indonesia’ s expo expansion 2000–
2007,
2000 dis ic weigh (s anda dized)
Gende , 1 = male, 0 = emale
Age (yea s) in 2000 (s anda dized)
Fa he ’ s yea s o educa ion in 2000
(s anda dized)
Su icien en ila ion in 2000, 1 = yes,
0 = no
Piles o ash a ound he house in 2000,
1 = yes, 0 = no
Dis ic ’ s adable employmen , cumula i e
annual g ow h 1997–
2000 (s anda dized)
Suma e a Ba a
Riau
Suma e a Sela an
Lampung
DKI Jaka a
Jawa Ba a
Jawa Tengah
ADBI Wo king Pape 1481 R. Laksono e al.
48
Table A8 con inued
(11)
Ja a
Island
0.881+
[0.515]
0.765
[0.501]
–
0.927+
[0.484]
4,035
0.041
81.61
0.001
0.594
0.045
0.621
No e: S anda d e o s a e p o ided in b acke s and a e clus e ed wi hin dis ic . The model uses expo o ASEAN egion o he PRC as he ins umen , which includes he ollowing
coun ies: B unei Da ussalam, Singapo e, Myanma , Malaysia, he Philippines, and Thailand. Indi idual-
le el da a co e all adul indi iduals ha exis ac oss he h ee la es IFLS
wa es: 2000, 2007, and 2014 (balanced panel). Con inuous a iables a e ans o med in o s anda dized a iables wi h mean = 0 and s anda d de ia ion = 1. Co a ia es a e used
ac oss all es ima ions. The S ock
-
Yogo (2005) c i ical alue wi h 10% maximal bias is 16.38, while he sugges ed minimum alue o F
-
s a ha is obus o he e oscedas ici y, se ial
co ela ion, and clus e ing p oblems (e ec i e F
-
s a ) is 23.1. Con idence se s (CS) a e based on 1
,
000 g id poin s in he in e al o [
–
0.5, 2]. Robus con idence se s a e based on he
Ande son
-
Rubin (AR) es and obus o he e oskedas ici y and clus e ing issues. Wald con idence se s a e based on 2SLS es ima es and a e no obus o weak ins umen s.
Signi icance: +
p
< 0.10, *
p
< 0.05, **
p
< 0.01, ***
p
< 0.001.
(10)
Non-
Ja a
Islands
–
0.112
[0.165]
0.0965
[0.105]
–
0.440
[1.346]
–
0.321
[0.350]
–
0.221
[0.156]
–
0.214+
[0.129]
2,866
0.021
5.176
0.258
...
0.019
1.16
(9)
High le el
0.345
[0.270]
0.312
[0.269]
0.412
[0.301]
0.697*
[0.278]
0.464
[0.311]
0.261
[0.371]
0.520*
[0.228]
594594
0.094
101.3
–
0.317
0.018
–
0.32
0.011
(8)
Mid le el
0.272*
[0.125]
0.129
[0.0970]
0.263
[0.208]
0.274*
[0.117]
1.218***
[0.186]
0.0738
[0.162]
–
0.00761
[0.115]
–
0.389***
[0.0838]
2,813
0.139
37.50
–
0.167
0.469
–
0.079
0.512
(7)
Low le el
–
0.0710
[0.162]
0.139
[0.162]
–
0.335*
[0.167]
–
0.271
[0.165]
–
2.235***
[0.539]
–
0.559
[0.368]
–
0.309+
[0.186]
–
0.159
[0.153]
3,005
–
0.053
19.22
0.213
0.871
0.175
0.748
(6)
Se ices
0.192
[0.168]
–
0.0101
[0.165]
–
0.0304
[0.198]
0.00317
[0.164]
–
1.944***
[0.320]
0.0670
[0.237]
–
0.180
[0.198]
0.0549
[0.160]
2,861
0.050
35.93
0.076
0.408
0.094
0.411
(5)
Manu ac u ing
–
0.0356
[0.254]
0.143
[0.226]
–
0.357
[0.271]
–
0.287
[0.233]
0.482
[0.363]
–
0.250
[0.339]
–
0.466+
[0.258]
0.150
[0.214]
848
0.089
46.54
0.016
0.906
0.083
0.936
(4)
Ag icul u e
and Mining
–
0.127
[0.297]
0.0668
[0.291]
–
0.453
[0.434]
–
0.225
[0.364]
–
0.968
[0.976]
–
0.0646
[0.336]
0.121
[0.360]
1,686
–
1.196
3.806
0.631
...
–
0.071
3.261
(3)
Male
0.331*
[0.134]
0.0857
[0.122]
–
0.0591
[0.179]
0.136
[0.152]
0.223
[1.147]
–
0.171
[0.306]
–
0.235
[0.203]
0.236*
[0.111]
3,116
–
0.052
29.73
0.213
0.914
0.282
0.934
(2)
Female
0.225*
[0.0880]
0.181+
[0.103]
–
0.0185
[0.113]
–
0.00302
[0.0890]
–
1.213*
[0.483]
–
0.262
[0.181]
–
0.175
[0.112]
–
0.268**
[0.0825]
3,785
0.008
37.18
–
0.105
0.453
–
0.043
0.482
(1)
Baseline
0.258**
[0.0862]
0.133
[0.0885]
–
0.0451
[0.129]
0.0566
[0.102]
–
0.0467
[1.036]
–
0.238
[0.237]
–
0.175
[0.124]
–
0.293***
[0.0823]
6,901
0.054
33.00
0.0211
0.646
0.093
0.675
Yogyaka a
Jawa Timu
Bali
NTB
Kal eng
Kalsel
Sulsel
Cons an
Obse a ions
R2
Kleibe gen-
Paap F
-
S a
Robus CS (lowe bound)
Robus CS (uppe bound)
Non obus
(Wald) CS (lowe bound)
Non obus (Wald) CS (uppe bound)
ADBI Wo king Pape 1481 R. Laksono e al.
49
Table A9: The He e ogeneous Impac o Expo Expansion o he PRC on Ea nings G ow h: 2SLS Es ima ion,
Full Resul s
(11)
Ja a
Island
0.123*
[0.0512]
–
0.00133
[0.0407]
–
0.0932***
[0.0207]
0.00174
[0.0178]
–
0.0151
[0.0503]
–
0.110
[0.0767]
–
0.00315
[0.0264]
0.249
[0.205]
0.185
[0.237]
con inued on nex page
(10)
Non-
Ja a
Islands
–
0.0693
[0.121]
–
0.00756
[0.0506]
–
0.0768**
[0.0253]
0.0241
[0.0217]
0.157*
[0.0675]
–
0.125+
[0.0678]
–
0.0425
[0.0268]
0.117
[0.108]
–
0.100
[0.240]
0.320***
[0.0677]
0.0307
[0.0893]
(9)
High le el
0.0474
[0.0935]
0.00765
[0.0828]
–
0.0840+
[0.0431]
0.000848
[0.0291]
–
0.0613
[0.227]
–
0.0596
[0.132]
–
0.0559
[0.0364]
0.504+
[0.302]
0.321
[0.399]
–
0.0539
[0.377]
–
0.0837
[0.267]
0.152
[0.232]
0.342
[0.236]
(8)
Mid le el
–
0.00138
[0.0485]
–
0.0480
[0.0473]
–
0.0524*
[0.0244]
0.00869
[0.0185]
–
0.0180
[0.0610]
–
0.123
[0.0862]
–
0.0276
[0.0230]
0.174
[0.172]
0.0851
[0.272]
0.443**
[0.166]
0.298*
[0.138]
0.167
[0.143]
0.197*
[0.0838]
–
0.0141
[0.116]
(7)
Low le el
–
0.120
[0.185]
0.0304
[0.0538]
–
0.0971***
[0.0240]
–
0.0650
[0.0513]
0.0763
[0.0599]
–
0.0760
[0.0702]
–
0.0580
[0.0486]
–
0.0799
[0.117]
–
0.563
[0.349]
0.194
[0.131]
–
0.168
[0.121]
0.282
[0.561]
–
0.192
[0.141]
–
0.212
[0.134]
(6)
Se ices
0.104*
[0.0468]
–
0.0612
[0.0400]
–
0.0953***
[0.0230]
0.0338+
[0.0189]
0.0322
[0.0484]
–
0.0711
[0.0751]
–
0.0543+
[0.0280]
0.214*
[0.107]
0.104
[0.240]
0.382**
[0.121]
–
0.128
[0.150]
–
0.212
[0.200]
0.0139
[0.0922]
–
0.114
[0.0940]
(5)
Manu ac u ing
0.0493
[0.160]
0.0907
[0.0867]
–
0.133**
[0.0460]
–
0.0179
[0.0377]
0.172
[0.110]
–
0.361**
[0.134]
0.0799
[0.0536]
–
0.364+
[0.192]
–
0.809***
[0.148]
0.289
[0.192]
0.204
[0.400]
–
0.251
[0.433]
–
0.0463
[0.129]
–
0.270
[0.206]
(4)
Ag icul u e
and Mining
–
0.129
[0.465]
–
0.0262
[0.0940]
–
0.0767*
[0.0329]
0.0188
[0.0473]
0.0345
[0.0905]
–
0.128+
[0.0746]
0.00220
[0.0375]
–
0.0477
[0.176]
–
0.462
[0.392]
0.0879
[0.138]
0.0222
[0.154]
0.712
[2.424]
–
0.145
[0.146]
–
0.0595
[0.142]
(3)
Male
0.114*
[0.0507]
–
0.0737***
[0.0192]
0.0232
[0.0164]
0.0485
[0.0461]
–
0.189**
[0.0613]
0.00722
[0.0268]
0.0464
[0.111]
–
0.413*
[0.167]
0.288**
[0.102]
0.118
[0.102]
–
0.191
[0.214]
–
0.0223
[0.0844]
–
0.0608
[0.0958]
(2)
Female
–
0.0105
[0.0886]
–
0.102***
[0.0269]
–
0.00336
[0.0227]
0.0592
[0.0676]
0.0397
[0.0799]
–
0.0611+
[0.0349]
0.165
[0.156]
0.486
[0.365]
0.336+
[0.188]
–
0.184
[0.173]
0.0298
[0.246]
0.0670
[0.110]
–
0.0546
[0.120]
(1)
Baseline
0.0746
[0.0513]
–
0.00258
[0.0315]
–
0.0845***
[0.0160]
0.0123
[0.0136]
0.0464
[0.0416]
–
0.109*
[0.0510]
–
0.0147
[0.0212]
0.0942
[0.0912]
–
0.182
[0.217]
0.306***
[0.0611]
0.0403
[0.0958]
–
0.120
[0.185]
0.00940
[0.0681]
–
0.0594
[0.0912]
Indonesia’ s expo expansion 2000–
2007, 2000 dis ic weigh (s anda dized)
Gende , 1 = male, 0 = emale
Age (yea s) in 2000 (s anda dized)
Fa he ’ s yea s o educa ion in 2000
(s anda dized)
Su icien en ila ion in 2000, 1 = yes,
0 = no
Piles o ash a ound he house in 2000, 1
= yes, 0 = no
Dis ic ’ s adable employmen ,
cumula i e annual g ow h 1997–
2000
(s anda dized)
Suma e a Ba a
Riau
Suma e a Sela an
Lampung
DKI Jaka a
Jawa Ba a
Jawa Tengah
ADBI Wo king Pape 1481 R. Laksono e al.
50
Table A9 con inued
(11)
Ja a
Island
0.373+
[0.217]
0.294
[0.211]
–
0.261
[0.209]
2,633
0.002
79.25
0.021
0.223
0.022
0.223
No e: S anda d e o s a e p o ided in b acke s and a e clus e ed wi hin dis ic . The model uses expo o ASEAN egion o he PRC as he ins umen , which includes he ollowing
coun ies: B unei Da ussalam, Singapo e, Myanma , Malaysia, he Philippines, and Thailand. Indi idual-
le el da a co e all adul indi iduals ha exis ac oss he h ee la es IFLS
wa es: 2000, 2007, and 2014 (balanced panel). Con inuous a iables a e ans o med in o s anda dized a iables wi h mean = 0 and s anda d de ia ion = 1.
Co a ia es a e used
ac oss all es ima ions. The S ock
-
Yogo (2005) c i ical alue wi h 10% maximal bias is 16.38, while he sugges ed minimum alue o F
-
s a ha is obus o he e oscedas ici y, se ial
co ela ion, and clus e ing p oblems (e ec i e F
-
s a ) is 23.1. Con idence se s (CS) a e based on 1,000 g id poin s in he in e al o [
–
0.5, 2]. Robus con idence se s a e based on he
Ande son
-
Rubin (AR) es and obus o he e oskedas ici y and clus e ing issues. Wald con idence se s a e based on 2SLS es ima es and a e no obus o weak ins umen s.
Signi icance: +
p
< 0.10, *
p
< 0.05, **
p
< 0.01, ***
p
< 0.001.
(10)
Non-
Ja a
Islands
0.208
[0.155]
0.186*
[0.0801]
0.208
[0.356]
0.0270
[0.131]
0.226*
[0.101]
–
0.202*
[0.0799]
1,773
0.020
5.521
...
0.098
–
0.307
0.168
(9)
High le el
0.153
[0.235]
0.144
[0.225]
0.318
[0.229]
–
0.0678
[0.276]
0.123
[0.295]
0.270
[0.254]
0.177
[0.304]
471
0.036
85.18
–
0.125
0.248
–
0.136
0.231
(8)
Mid le el
0.145+
[0.0831]
0.141
[0.0921]
0.413**
[0.142]
0.391***
[0.0885]
0.184
[0.343]
0.202
[0.132]
0.351**
[0.126]
–
0.0986
[0.0960]
1,839
0.024
38.40
–
0.105
0.093
–
0.096
0.094
(7)
Low le el
0.0564
[0.120]
–
0.0701
[0.132]
–
0.0616
[0.184]
0.112
[0.135]
–
0.171
[0.203]
0.0724
[0.148]
–
0.114
[0.122]
1,853
0.020
19.09
...
0.218
–
0.483
0.242
(6)
Se ices
0.0896
[0.0875]
0.0240
[0.0753]
0.0983
[0.140]
0.0878
[0.0998]
–
0.0534
[0.141]
0.161+
[0.0881]
0.0363
[0.0781]
2,304
0.021
39.99
0.003
0.193
0.012
0.196
(5)
Manu ac u ing
–
0.132
[0.226]
–
0.143
[0.153]
–
0.125
[0.259]
0.450+
[0.239]
0.168
[0.236]
–
0.174
[0.255]
0.143
[0.356]
–
0.150
[0.147]
648
0.062
41.57
–
.252252
.405906
–
.265144
.363683
(4)
Ag icul u e
and Mining
0.234+
[0.139]
0.0211
[0.148]
0.148
[0.233]
0.196
[0.192]
0.0134
[0.246]
0.182
[0.173]
–
0.0451
[0.205]
1,099
0.011
4.330
...
0.856
–
1.042
0.783
(3)
Male
0.163*
[0.0748]
–
0.0142
[0.0805]
0.0619
[0.143]
0.166+
[0.0982]
0.0747
[0.209]
–
0.0133
[0.109]
0.208*
[0.103]
–
0.0421
[0.0791]
2,782
0.018
33.60
0.026
0.238
0.015
0.213
(2)
Female
0.0545
[0.106]
0.139
[0.106]
0.314+
[0.179]
0.252**
[0.0798]
–
0.0592
[0.188]
0.169
[0.107]
–
0.143
[0.0899]
1,624
0.024
40.53
–
0.207
0.156
–
0.184
0.163
(1)
Baseline
0.122*
[0.0596]
0.0474
[0.0708]
0.164
[0.135]
0.196**
[0.0760]
0.0600
[0.265]
–
0.0220
[0.104]
0.196*
[0.0848]
–
0.0737
[0.0605]
4,406
0.017
36.04
–
0.024
0.186
–
0.026
0.175
Yogyaka a
Jawa Timu
Bali
NTB
Kal eng
Kalsel
Sulsel
Cons an
Obse a ions
R2
Kleibe gen-
Paap F
-
S a
Robus CS (lowe bound)
Robus CS (uppe bound)
Non obus (Wald) CS (lowe bound)
Non obus (Wald) CS (uppe bound)
ADBI Wo king Pape 1481 R. Laksono e al.
51
Table A10: Impac o Expo Expansion o he PRC on Fo mali y and Ea nings
G ow h: 2SLS Es ima ion, Ma ched Da ase s, Full Resul s
(1)
(2)
(3)
(4)
Fo mali y,
All
Fo mali y,
Ma ched
Ea nings,
All
Ea nings,
Ma ched
Indonesia’s expo expansion 2000–2007, 2000 dis ic
weigh (s anda dized)
0.384**
0.222*
0.0746
0.185***
[0.148]
[0.106]
[0.0513]
[0.0503]
Gende , 1 = male, 0 = emale
0.560***
0.366***
–0.00258
–0.00186
[0.0330]
[0.0586]
[0.0315]
[0.0462]
Age (yea s) in 2000 (s anda dized)
–0.0450**
–0.0544*
–0.0845***
–0.0705**
[0.0140]
[0.0264]
[0.0160]
[0.0239]
Fa he ’s yea s o educa ion in 2000 (s anda dized)
0.0799***
0.0596**
0.0123
0.0183
[0.0129]
[0.0208]
[0.0136]
[0.0186]
Su icien en ila ion in 2000, 1 = yes, 0 = no
0.111**
0.178**
0.0464
–0.00510
[0.0358]
[0.0587]
[0.0416]
[0.0604]
Piles o ash a ound he house in 2000, 1 = yes,
0 = no
–0.241***
–0.441***
–0.109*
–0.189
[0.0462]
[0.106]
[0.0510]
[0.117]
Dis ic ’s adable employmen , cumula i e annual
g ow h 1997–2000 (s anda dized)
0.00141
–0.00410
–0.0147
–0.0570
[0.0418]
[0.0431]
[0.0212]
[0.0460]
Suma e a Ba a
0.0910
0.0740
0.0942
0.267***
[0.103]
[0.153]
[0.0912]
[0.0761]
Riau
–0.314
–0.819***
–0.182
–0.0196
[0.230]
[0.217]
[0.217]
[0.246]
Suma e a Sela an
–0.0455
0.0344
0.306***
0.315**
[0.147]
[0.207]
[0.0611]
[0.119]
Lampung
–0.263+
–0.102
0.0403
–0.0501
[0.152]
[0.262]
[0.0958]
[0.101]
DKI Jaka a
–0.749
–0.456
–0.120
–0.349
[0.545]
[0.386]
[0.185]
[0.281]
Jawa Ba a
0.0394
0.198
0.00940
–0.0204
[0.0913]
[0.124]
[0.0681]
[0.0925]
Jawa Tengah
0.133
0.0223
–0.0594
–0.0850
[0.100]
[0.146]
[0.0912]
[0.114]
Yogyaka a
0.258**
0.298*
0.122*
0.111
[0.0862]
[0.148]
[0.0596]
[0.0821]
Jawa Timu
0.133
0.207
0.0474
–0.0246
[0.0885]
[0.137]
[0.0708]
[0.0889]
Bali
–0.0451
–0.0487
0.164
0.111
[0.129]
[0.220]
[0.135]
[0.148]
NTB
0.0566
0.539***
0.196**
0.184+
[0.102]
[0.154]
[0.0760]
[0.0944]
Kal eng
–0.0467
0.466
0.0600
0.0559
[1.036]
[0.779]
[0.265]
[0.181]
Kalsel
–0.238
–0.262
–0.0220
–0.0475
[0.237]
[0.288]
[0.104]
[0.176]
Sulsel
–0.175
–0.109
0.196*
0.0150
[0.124]
[0.162]
[0.0848]
[0.129]
Cons an
–0.293***
0.0509
–0.0737
–0.0311
[0.0823]
[0.123]
[0.0605]
[0.0719]
Obse a ions
6,901
2,192
4,406
1,813
R2
0.054
0.023
0.017
–0.000
Kleibe gen-Paap F-S a
33.00
44.23
36.04
46.16
Robus CS (lowe bound)
0.021
–0.02
–0.025
0.076
Robus CS (uppe bound)
0.646
0.413
0.186
0.278
Non obus (Wald) CS (lowe bound)
0.093
0.015
–0.026
0.087
Non obus (Wald) CS (uppe bound)
0.675
0.429
0.175
0.284
No e: Columns (1) and (3) co e all samples, while Columns (2) and (4) only include ma ched indi iduals ac oss con ol
and ea men g oups. Indi iduals li ing in a egion whe e expo expansion is la ge han he 75 h pe cen ile a e
conside ed o be in he ea ed g oup. S anda d e o s a e p o ided in b acke s and a e clus e ed wi hin dis ic . The
model uses expo o ASEAN egion o he PRC as he ins umen , which includes he ollowing coun ies: B unei
Da ussalam, Singapo e, Myanma , Malaysia, he Philippines, and Thailand. Indi idual-le el da a co e all adul
indi iduals ha exis ac oss he h ee la es IFLS wa es: 2000, 2007, and 2014 (balanced panel). Con inuous a iables
a e ans o med in o s anda dized a iables wi h mean = 0 and s anda d de ia ion = 1. Co a ia es a e used ac oss all
es ima ions. The S ock-Yogo (2005) c i ical alue wi h 10% maximal bias is 16.38, while he sugges ed minimum alue
o F-s a ha is obus o he e oscedas ici y, se ial co ela ion, and clus e ing p oblems (e ec i e F-s a ) is 23.1.
Con idence se s (CS) a e based on 1,000 g id poin s in he in e al o [–0.5, 2]. Robus con idence se s a e based
on he Ande son-Rubin (AR) es and obus o he e oskedas ici y and clus e ing issues. Wald con idence se s a e
based on 2SLS es ima es and a e no obus o weak ins umen s. Signi icance: + p < 0.10, * p < 0.05, ** p < 0.01,
*** p < 0.001.
ADBI Wo king Pape 1481 R. Laksono e al.
52
Table A11: The Impac o Expo Expansion o he PRC on Fo mal Employmen by Decile o Ea nings: 2SLS Es ima ion,
Full Resul s, Ma ched Da ase s
(10)
10 h
–
0.156
[0.151]
0.390*
[0.157]
0.162+
[0.0890]
0.0824
[0.0692]
0.131
[0.195]
–
0.717+
[0.428]
–
0.100
[0.0937]
0.689
[0.460]
0.980**
[0.315]
0.342
[0.382]
0.580
[0.425]
0.710*
[0.306]
0.369
[0.353]
con inued on nex page
(9)
9 h
–
0.248
[0.192]
–
0.121
[0.106]
0.212**
[0.0807]
0.0242
[0.0472]
0.208
[0.279]
0.557+
[0.292]
–
0.00821
[0.0612]
0.0290
[0.316]
0.491
[0.320]
0.822*
[0.327]
0.550
[0.575]
0.266
[0.333]
–
0.0197
[0.441]
(8)
8 h
–
0.252*
[0.111]
0.339
[0.216]
–
0.0424
[0.117]
–
0.148
[0.0970]
0.620*
[0.294]
0.643
[0.426]
–
0.238*
[0.0991]
1.209**
[0.447]
–
1.069**
[0.362]
0.191
[0.731]
–
0.593
[0.566]
0.843*
[0.414]
0.616+
[0.344]
0.867*
[0.433]
(7)
7 h
–
0.434***
[0.125]
0.0894
[0.130]
–
0.184*
[0.0858]
–
0.0324
[0.0597]
–
0.366*
[0.163]
–
0.0957
[0.257]
–
0.134*
[0.0629]
0.147
[0.303]
–
0.0218
[0.486]
0.0747
[0.355]
0.366
[0.424]
1.581**
[0.601]
0.397
[0.268]
0.438
[0.339]
(6)
6 h
0.0780
[0.152]
0.392*
[0.195]
–
0.201*
[0.0860]
0.207***
[0.0592]
–
0.469*
[0.187]
–
0.125
[0.391]
–
0.151
[0.0921]
–
0.315
[0.398]
–
0.918*
[0.395]
–
0.935+
[0.525]
–
0.813*
[0.408]
–
0.784*
[0.381]
–
0.600
[0.438]
(5)
5 h
0.721**
[0.244]
0.0899
[0.148]
–
0.133+
[0.0769]
0.149**
[0.0549]
–
0.0269
[0.147]
–
0.834*
[0.369]
0.301
[0.185]
0.294
[0.301]
–
0.296
[0.309]
–
0.180
[0.269]
–
1.827
[1.120]
0.377+
[0.218]
0.212
[0.232]
(4)
4 h
1.134**
[0.425]
0.235
[0.180]
–
0.145
[0.0882]
0.0742
[0.0788]
0.0722
[0.185]
–
0.0949
[0.448]
0.116
[0.114]
–
0.0902
[0.562]
–
1.993*
[0.853]
–
0.563
[0.375]
–
0.339
[0.243]
–
2.059*
[0.991]
0.0995
[0.412]
0.0455
[0.311]
(3)
3 d
0.676+
[0.388]
0.515**
[0.163]
–
0.160*
[0.0730]
0.107
[0.0752]
–
0.0732
[0.170]
–
0.152
[0.301]
0.130
[0.201]
0.605*
[0.275]
0.191
[0.310]
0.819+
[0.452]
–
1.323
[1.596]
0.971**
[0.347]
0.743**
[0.283]
(2)
2nd
0.687***
[0.160]
0.0632
[0.130]
–
0.0236
[0.0772]
0.154**
[0.0587]
0.299+
[0.179]
0.190
[0.178]
0.144
[0.0993]
–
0.997**
[0.360]
–
0.447
[0.385]
–
0.736*
[0.363]
–
2.419**
[0.836]
–
0.555
[0.384]
–
0.729*
[0.363]
(1)
1s
0.382***
[0.111]
0.642***
[0.126]
–
0.0925
[0.0628]
0.134
[0.0827]
0.0275
[0.103]
–
0.653***
[0.168]
–
0.0308
[0.0461]
–
0.902
[0.558]
–
1.420*
[0.578]
–
0.464
[0.543]
–
0.507
[0.604]
–
1.419+
[0.772]
–
0.525
[0.550]
–
0.632
[0.570]
Indonesia’ s expo expansion 2000–
2007,
2000 dis ic weigh (s anda dized)
Gende , 1 = male, 0 = emale
Age (yea s) in 2000 (s anda dized)
Fa he ’ s yea s o educa ion in 2000
(s anda dized)
Su icien en ila ion in 2000, 1 = yes, 0 = no
Piles o ash a ound he house in 2000,
1 = yes, 0 = no
Dis ic ’ s adable employmen , cumula i e
annual g ow h 1997–
2000 (s anda dized)
Suma e a Ba a
Riau
Suma e a Sela an
Lampung
DKI Jaka a
Jawa Ba a
Jawa Tengah
