In this seminar Dr Krisztina Kis-Katos will measure the effects of trade liberalisation from 1993 to 2002 on regional poverty levels in 259 Indonesian regions, and investigate the labour market mechanisms behind these effects. The identification strategy relies on combining information on initial regional labour and product market structure with the exogenous tariff reduction schedule over four three-year periods. Dr Kis-Katos finds that poverty reduced more in regions that were more strongly exposed to import tariff liberalisation. Among the potential channels behind this effect, the formalisation of the unskilled labour force and structural reallocation of labour is highlighted. Dr Kis-Katos argues that job formation and increases in the wage bill of the unskilled were related to reductions in import tariffs on intermediate goods and not to reductions in import tariffs on final outputs. These results point towards increasing firm competitiveness as a driving factor behind the beneficial poverty effects.