Tropical Oil Crops and Rural Poverty

Abstract

I study the poverty impacts of the largest modern plantation-based agricultural expansion, Indonesian palm oil over the 2000s. Causal effects are identified by instrumenting the decadal expansion in the area planted with oil palm in each district with its agro-climatically attainable yield. Of the more than 10 million Indonesians lifted from poverty over the 2000s, my most conservative estimate suggests at least 1.3 million rural people have escaped poverty due to growth in the palm oil sector. The areal expansion increased expenditure for low income households and expanded rural public services, specifically road networks and households’ access to electricity.