INDONESIA

As the world’s largest exporter of coal, Indonesia has outlined its commitment to transitioning away from fossil fuels and reducing greenhouse emissions under the Just Energy Transition Partnership (JETP). With 30,000 workers in the coal sector potentially facing layoffs from 2020 to 2040, the transition necessitates extensive investment to re-train employees currently in the coal sector.

An August working paper from the Institute for Economic and Social Research at Universitas Indonesia quantitatively projects the impacts of transitioning the Indonesian power sector from 2020 to 2050:

“Indonesia faces a huge task of ensuring its workers are ready to fulfil the demands of green jobs, but avenues of opportunities remain open. Despite the skill requirement issue promoted by Vona et al. (2015) and Consoli et al. (2015), Bowen et al. (2018) argued that the majority of green jobs bear similar tasks to non-green ones and thus enable affordable and manageable up-skilling and re-skilling. Many skills in both types of jobs are rudimentary and generally applicable in different sectors, such as welding and regular desk work. Given their similarities and marginal differences, on-the-job training would suffice in preparing workers for green jobs. This means workers would only need additional hours of training and supervision instead of an academic qualification. Hence, although most Indonesian workers do not have a high school diploma or higher, on-the-job training should be able to help the Indonesian workforce qualify for green jobs.”

+  “Indonesia now produces around half of the world’s nickel supply. Coal consumption in Indonesia increased 33 percent from 2021 to 2022, in large part from nickel smelting, making the transition to net zero that much harder.” By Anna McNulty. Link. And in PW, see Alvin Camba on how banning the export of raw nickel ore became a centerpiece of Indonesia’s industrial policy. Link.

+  See the New Climate Institute’s estimate of the investment needed to ensure re-training programs for Indonesia’s coal workers. Link. “Layoffs are not limited to Indonesian coal workers as they affect coal workers worldwide. An average of 100 coal miners globally could potentially face unemployment each day by 2035.” By Faisal Maliki Baskoro. Link.

+  See the Global Energy Monitor’s November update to their 2023 report on emerging captive coal power, in which they find a 15 percent increase in Indonesia’s coal power capacity since last year. Link. And see the Rocky Mountain Institute on how overcapacity and pre-existing coal contracts produce under-utilization in Indonesia’s electricity grid and impede the green transition. Link.

NEW RESEARCHERS

Instrumental Variables

PEDRO PICHETTI is a PhD Candidate at INSPER Institute of Education and Research in Brazil. In his job market paper, he critiques the instrumental variables method employing cross-sectional data or panel data, prevalent in econometrics literature.

From the abstract:

“The instrumental variables (IV) method has been widely studied in cross-sectional settings. However, many practical applications involve panel data, in settings where a unit’s treatment status may turn on or off over time. I show that in the presence of dynamic treatment effects, i.e., if past treatments affect current potential outcomes, standard methods are no longer valid if the instruments are serially correlated. This paper shows the nonparametric identification of dynamic causal effects in a potential outcomes framework in which potential outcomes depend on the treatment path taken by a unit through time but the first stage is static, in the sense that at each period the IV only instruments its contemporary treatment. I provide a nonparametric estimator that is consistent over the randomization distribution and derive its finite-population limiting distribution as the sample size increases. Monte Carlo Simulations illustrate the desirable finite-sample properties of the estimators. An application of the estimator shows that law enforcement curbs illegal deforestation until two years after the actual detection of illegal practice, but effects fade out afterwards.”

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+  “While Israel’s campaign to undermine UNRWA is decades-long, it appears that the ‘terrorist’ designation might be the act that ultimately collapses the agency.” New on PW, Jack Gross and Dylan Saba interview Lisa Bhungalia on UNRWA and the politics of aid in Palestine. Link. 

+  “Our scenario analysis shows that US repeal of the IRA would, in the most likely scenario, harm US manufacturing and trade and create up to $80 billion in investment opportunities for other countries, including major US competitors like China.” By Bentley Allan and Tim Sahay. Link.

+  See an Al-Shabaka roundtable on what implications the US presidential elections hold for the Palestinian struggle, popular organizing in the US, and American foreign diplomacy. Link.

+  See two recent papers by Isabella Weber and several co-authors, one examining windfall profits in the oil sector during the 2022 oil and gas crisis, the other analyzing the earnings call transcripts of over 4,000 stock-market listed US corporations: “Firms expect their competitors to increase prices while the shock lasts and hence feel safe to do the same. Companies expect windfalls when costs eventually come down, since they do not lower prices symmetrically.” Link, link.

+  “Donald Trump is not George McGovern. The attempt to portray him as foreign to the body politic failed, because there is nothing remotely un-American about him.” By Tim Barker. Link.

+  See Diana Reddy on how the 2021–2024 National Labor Relations Board took innovative steps to challenge what legal scholars have dubbed the “ossification” of labor law. Link.

+  See Linda W. Chang, Erika L. Kirgios, Sendhil Mullainathan, and Katherine L. Milkman’s critique of “quantitative fixation,” whereby over-reliance on numeric metrics can distort comparative decision making in hiring, donation, and policy decisions. Link.

+  “Workers experience what we call a class ceiling: parties are much less likely to promote them upward on the political career ladder conditional on their observable qualifications.” By Olle Folke and Johanna Rickne. Link.

+  “SWIFT is still the dominant system for inter-bank cross-border payments messages. It was launched in 1977 as a non-profit cooperative owned by its member banks, and headquartered in Brussels. It is thus firmly in the private sector and invites only constrained oversight by central banks despite its importance to the architecture of globalisation. In its first years, SWIFT’s physical infrastructure comprised a group of computing centres in key financial capitals (consolidator hubs) in Western Europe and New York, linked to member banks through local terminals. SWIFT leased capacity from national Postal, Telephone, Telegraph systems to provide an infrastructure to send instructions and messages from member banks’ terminals to the consolidator hubs and back out to correspondent banks to adjust their accounts in response to customer orders. A key aspect was standardisation of bank names and amounts, which reduced the time required to key in these details. Settlement still took place by adjustment of bilateral correspondent accounts and there was no netting of payments; SWIFT merely increased the efficiency of instructions between banks.” By Catherine R. Schenk. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org