Local labor market effects of FDI regulation in Indonesia

Professor Krisztina Kis-Katos, University of Göttingen

Using yearly Indonesian labor market data for 2001 to 2015, we investigate the labor market effects of a protectionist foreign direct investment (FDI) policy reform. The so-called negative investment list regulates FDI at the product level and underwent two major revisions in 2007 and 2010. We construct spatial measures of regulatory penetration based on firm-level data and thereby exploit the exposure of local manufacturing industry employment to the negative investment list. Based on long-difference estimations, we document employment increases in regions most exposed to FDI regulation. The rise in employment is robust to controlling for a rich set of political economy factors and is realised immediately after regulation, while also persisting in the long-run. Controlling for individual worker characteristics, our findings also show increases in manufacturing wages, especially among female and low-skilled workers.

About the speaker

Krisztina Kis-Katos joined the University of Göttingen as professor for International Economic Policy in 2016.
She studied Economics in Szeged and Konstanz, completed the Swiss Doctoral Program at the Study Center Gerzensee, and received her doctoral degree in Economics in 2010 at the University of Freiburg in Germany.
Her research interests lie in the fields of applied development economics and political economy. Her recent research projects focus on the effects of globalization and more generally of macro-economic processes or related public policies on a range of social and economic outcomes, including labor market and firm outcomes, land use change and deforestation.

Venue: 0.16/0.17

Date: 21 November 2019

Time: 12:30 - 13:30