Short Run Impacts of Tariff Reforms on Regional Employment in Indonesia: A Multiregional Computable General Equilibrium Approach

This research is aimed at analysing impacts of tariff reforms on Regional Imployment in Indonesia by applying Multiregional Computable General Equilibrium. This model consists of 15 sectors and 5 regions. Multiregional I-O Table1990 updating into 1995 was applied. The research results show that all regions experience an increase in numbers employed with the exception of Java because its industries change toward more capital intensive than labor intensive industries. This study also finds that broad trade liberalization (the second policy scenario) has resulted in much higher impacts on employment implying that the degree of impact on total employment is associated with the degree of openness. Moreover, liberalization of Indonesian trade changes the occupational pattern of employment. Employment contracts heavily in the agricultural sectors. In these sectors, both unpaid and paid agricultural workers are disadvantaged from trade liberalization with the exception being in Kalimantan and Sulawesi. Across sectors, skilled and unskilled workers are the winners from tariff reforms both at regional and national levels