In Indonesia, an export boom and rapid, sustained gross domestic product (GDP) growth in the decade after 2000 was accompanied by real earnings that were flat on average, and even declined for many workers. Conventional models of growth and trade predict that labor productivity rises as an...

For a decade from 2000 Indonesia underwent a natural resource export boom. Aggregate income rose, but real labor earnings stagnated. Employment rose mainly in low-skill sectors with predominantly informal employment arrangements. In this paper we reveal causal connections from the aggregate...

Does globalization increase inequality in developing countries, and if so, how? In a theoretical model of a regionally heterogeneous economy, we show how different regional rates of technical progress due to trade and FDI interact with constraints to unskilled labor mobility. As favored regions...