Natural resource prices and welfare: Evidence from Indonesia’s coal and palm oil boom

This study measures the impact of coal and palm oil prices during the 2000s commodity boom in Indonesia on regional poverty, household consumption, employment and wages. The strategy is to exploit the within-country variation in exposure to each commodity, interacted with exogenous changes in global commodity prices. I focus on two of Indonesia’s main export commodities, coal and palm oil. I find that an increase in the price of coal and palm oil both decrease the poverty rate in districts that produce them relative to districts that do not. However, the mechanisms through which they affect poverty are different.