Good mine, bad mine: Natural resource heterogeneity and Dutch disease in Indonesia

Paul Pelzl and Steven Poelhekke

No 15271, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyze the local effect of exogenous shocks to the value of mineral deposits on a panel of manufacturing plants in Indonesia. We introduce heterogeneity in natural resource extraction methods, which helps to explain the mixed evidence found in the `Dutch disease' literature. In districts where mineral extraction is relatively capital intensive, mining booms cause virtually no upward pressure on manufacturing wages, and both producers of more heavily traded and relatively less-traded manufacturing goods benefit from mining booms in terms of employment. In contrast, labor-intensive mining booms drive up local wages such that heavily traded goods producers respond by reducing employment.

Keywords: Dutch disease; Traded sector; Natural resources; Mining; Labor intensity; Indonesia (search for similar items in EconPapers)
JEL-codes: F00 L16 L60 L72 O12 O13 Q30 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-env and nep-sea
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Related works:
Journal Article: Good mine, bad mine: Natural resource heterogeneity and Dutch disease in Indonesia (2021)
Working Paper: Good Mine, Bad Mine: Natural Resource Heterogeneity and Dutch Disease in Indonesia (2018)
Working Paper: Good mine, bad mine: Natural resource heterogeneity and Dutch disease in Indonesia (2018)
Working Paper: Good mine, bad mine: Natural resource heterogeneity and Dutch disease in Indonesia (2018)
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