Import competition and local labor markets: the case of Indonesia

This paper analyzes the effects of import competition on Indonesian local labor markets in term of manufacturing employment share, non-manufacturing employment share, unemployment rate, and wages. A rapid increase in globalization has caused many countries including Indonesia experiences a significant increase in imports, which leads to tougher import competition. Using data of imports from 430 districts in Indonesia in the period of 2007-2013, we find that import competition has negatively affected manufacturing employment share, non-manufacturing employment share, and wages. It also increases unemployment. Besides, the highest impact is mainly driven by imports of consumption goods.