ABSTRACT

Trade liberalization agreement has made great opportunities to enhance economic growth for those participating countries. Trade liberalization would then inevitably affect factors of production within countries. The aim of study is to analyse the impact of trade liberalization on labour demand in manufacturing industries in Indonesia. This study used industrial manufacturing firm level data over the period 2008–2013 and estimates using panel data regression analysis following a fixed effect method. The results showed that tariff rates, value added, imports of raw materials, and export significantly affect the labour demand. Furthermore, labour wages negatively affect labour demands of the Indonesia manufacturing industry.