The effect of the COVID-19 lockdown on Balinese agriculture and labour market

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72% of Bali’s land is used for agricultural activities, making agriculture the second-largest contributor to Bali’s income.
In response to the 2020 COVID-19 pandemic, policymakers adopted unprecedented measures to limit disease spread, with major repercussions on labour markets and economic activity. tourism-dependent economies where a large share of the local gross domestic product and of the workforce is employed in the touristic sector—have been among the worst hit by the restrictions. In fact, since the COVID-19 outbreak in Bali, the tourism sector has been heavily affected by restriction measures.

According to a report by the UN World Food Programme (UN World Food Programme 2020), to cope with the dramatic condition of the tourism industry, formerly the first source of income (Antara and Sumarniasih 2017), the Balinese labour force reallocated towards the primary sector. As stated by UN World Food Programme (2020), in Indonesia, ‘the agriculture sector has served as a buffer during the pandemic, by absorbing labour released by other sectors’ [and] ‘the number of workers in the agriculture sector increased by 2.8 million between August 2019 and August 2020, while total employment in the country decreased. ‘The UN report also highlights that Bali reported the highest increase in unemployment, from 1.6% in August 2019 to 5.6% in August 2020, and the sharpest decline in wages (−18%), which dropped below the minimum wage.

To empirically evaluate the short-run impact of the COVID-19 lockdown on agricultural land greenness (a proxy for agricultural productivity) we leveraged Machine Learning, Econometrics and Satelite Data.

Our findings suggest that the lockdown had on average increased the value of EVI on the whole Badung regency by 1.17%, from the average values that would have been observed had the epidemic not occurred. 
 A potential explanatory mechanism for these dynamics is the following: a decline in the labour demand (and thus the relative wage) of the tourism sector crowded workers into the agricultural sector. For fixed land supply in the short term, land productivity increases as a consequence of more labour.

For more details on our findings, you can find our full publication on IOP.

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