Hertel, Thomas W.Ivanic, MarosPreckel, Paul V.Cranfield, John A.L.2014-02-252014-02-252004-05World Bank Economic Reviewhttps://hdl.handle.net/10986/17157Most researchers examining poverty and multilateral trade liberalization have had to examine average, or per capita effects, suggesting that if per capita real income rises, poverty will fall. This inference can be misleading. Combining results from a new international cross-section consumption analysis with earnings data from household surveys, this article analyzes the implications of multilateral trade liberalization for poverty in Indonesia. It finds that the aggregate reduction in Indonesia's national poverty headcount following global trade liberalization masks a more complex set of impacts across groups. In the short run the poverty headcount rises slightly for self-employed agricultural households, as agricultural profits fail to keep up with increases in consumer prices. In the long run the poverty headcount falls for all earnings strata, as increased demand for unskilled workers lifts incomes for the formerly self-employed, some of whom move into the wage labor market. A decomposition of the poverty changes in Indonesia associated with different countries' trade policies finds that reform in other countries leads to a reduction in poverty in Indonesia but that liberalization of Indonesia's trade policies leads to an increase. The method used here can be readily extended to any of the other 13 countries in the sample.en-USCC BY-NC-ND 3.0 IGOAGRICULTURAL COMMODITIESAGRICULTURAL EXPORT SUBSIDIESAGRICULTURAL PRODUCTSAGRICULTURAL SUBSIDIESAGRICULTURAL TRADEAGRICULTURAL TRADE LIBERALIZATIONAGRICULTUREAPPARELAPPAREL EXPORTSAPPAREL PRODUCTSAVERAGE TARIFFAVERAGE TARIFFSBARGAININGBENCHMARKBIDSBORROWINGBUDGET CONSTRAINTCAPITAL GOODSCAPITAL INTENSITYCAPITAL RETURNCAPITAL SHARECAPITAL STOCKCHILD LABORCOMMODITIESCOMMODITIES PRODUCERCOMMODITYCOMMODITY PRICECOMMODITY PRICESCONSTANT SHARECONSUMER DEMANDCONSUMER DEMANDSCONSUMER EXPENDITURECONSUMER GOODCONSUMER PREFERENCESCONSUMER PRICESCONSUMER SPENDINGCONSUMERSDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPING ECONOMIESDEVELOPING ECONOMYDEVELOPMENT BANKDEVELOPMENT ECONOMICSDISTRIBUTION OF INCOMEDURABLEDURABLE GOODSDURABLESECONOMIC ANALYSISECONOMIC CRISISECONOMIC POLICYELASTICITYELASTICITY OF TRANSFORMATIONEMPLOYMENTEXOGENOUS SHOCKSEXPENDITUREEXPENDITURESEXPORT TAXESEXPORTSFACTOR ENDOWMENTSFACTOR MARKETSFACTOR PRICEFACTORS OF PRODUCTIONFAMILY LABORFOOD PRICEFOOD PRICESGDPGDP PER CAPITAGENERAL EQUILIBRIUMGENERAL EQUILIBRIUM MODELGENERAL EQUILIBRIUM MODELINGGENERAL EQUILIBRIUM ¨ ANALYSISGLOBAL ECONOMYGLOBAL TRADEGLOBAL TRADE ANALYSISGOVERNMENT SPENDINGHOUSEHOLD BUSINESSHOUSEHOLD EARNINGSHOUSEHOLD INCOMEHOUSEHOLD INCOMESHUMAN CAPITALIMPACT OF TRADEIMPACT OF TRADE LIBERALIZATIONIMPORT TARIFFSINCOME EFFECTINCOME INEQUALITYINCOME LEVELINCOME LEVELSINSURANCEINTERNATIONAL BANKINTERNATIONAL ECONOMICSINTERNATIONAL ECONOMYINTERNATIONAL INVESTMENTINTERNATIONAL TRADEINVESTINGLABOR MARKETLABOR MARKETSLAND HOLDINGSLANDLESS LABORERSMACROECONOMIC SHOCKSMACROECONOMICSMARKET ACCESSMARKET PRICEMARKET WAGESMULTILATERAL TRADEMULTILATERAL TRADE LIBERALIZATIONNATIONAL INCOMENATURAL RESOURCESOUTPUTPER CAPITA INCOMEPER CAPITA INCOMESPERFECT COMPETITIONPOWER PARITYPRICE CHANGESPRICE DECLINESPRICE INCREASESPRIMARY FACTORSPRODUCTION FUNCTIONPROTECTION ESTIMATESPURCHASING POWERQUOTA RENTSREAL INCOMERETURNSSAVINGSSPECIALIZATIONTARIFF DATATARIFF RATESTARIFF REVENUETAXTAX REVENUESTRADE BARRIERSTRADE LIBERALIZATIONTRADE MODELSTRADE POLICIESTRADE POLICYTRADE REFORMTRADINGTRADING SYSTEMTRANSFER PAYMENTSUNILATERAL TRADEUNSKILLED LABORUNSKILLED WORKERSUTILITY FUNCTIONWAGE RATESWAGESWELFARE IMPACTSWORLD ECONOMYWORLD PRICESWORLD TRADEWORLD TRADE ORGANIZATIONWTOJournal ArticleWorld Bank10.1596/17157