Riandy Laksono presents his research about the impacts of rising exports on labor market outcomes in Indonesia.

Does export improve workers’ livelihood? The answer to this is not always clear from the literature. Despite a rising role in export market, informality is still high, and inequality worsens in many developing economies. In addition, export expansion driven by commodity has also been linked with Dutch disease phenomenon. Using the case of a major commodity-dependent nation, namely Indonesia, we assess the labor market effect of a broader export expansion, which includes manufacturing exports apart from commodities. We examine Indonesia’s export expansion during the early 2000s, which was triggered by import demand shock from China following its accession to the World Trade Organization (WTO). We observe that more exposure to export expansion improves individuals’ formal employment opportunities in cumulative terms by 2014. Export expansion, however, does not appear to improve individuals' earnings growth in general but only in specific cases. We further find this export expansion episode to be relatively progressive as it raises more formal employment opportunities and earnings growth for individuals in the lower- and middle-income brackets. As we cover all tradable goods, we are able to identify distinct impacts of different export categories. We show that the improvement in labor market outcomes in our result is mainly underpinned by manufacturing export expansion, rather than commodities.

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