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The Impact of Foreign Labor on Host Country Wages: The Experience of a Southern Host, Malaysia

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  • Athukorala, Prema-chandra
  • Devadason, Evelyn S.

Abstract

This paper investigates the impact of foreign labor on domestic manufacturing wages through a case study of Malaysia, a country where foreign labor has played a key role in manufacturing growth over the past two decades. The main focus of the paper is on an econometric analysis of the determinants of inter-industry variation in wage growth using a new panel dataset. The results suggest that wage growth is fundamentally embedded in the structure and performance of domestic manufacturing. There is evidence of a statistically significant negative impact of foreign labor on the growth of unskilled-worker wages, but the magnitude of the impact is rather small.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 40 (2012)
Issue (Month): 8 ()
Pages: 1497-1510

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Handle: RePEc:eee:wdevel:v:40:y:2012:i:8:p:1497-1510

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: international labor migration; foreign workers; wages; Asia; Malaysia;

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References

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  1. Gianmarco I. P. Ottaviano & Giovanni Peri, 2012. "Rethinking The Effect Of Immigration On Wages," Journal of the European Economic Association, European Economic Association, vol. 10(1), pages 152-197, 02.
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Cited by:
  1. Fariastuti Djafar & Mohd Khairul Hisyam Hassan, 2013. "Does Trade With Labour Sending Countries Reduce Demand for Migrant Workers: A Lesson from Malaysia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(10), pages 1325-1336, October.
  2. Nurrachmi, Rininta & Mad-Ahin, Ashanee & Waeowanjit, Phimpaporn & Kareemarif Arif, Naz Abdul, 2012. "Article Review on World Bank Report, Optimal Design for a Minimum Wage Policy in Malaysia," MPRA Paper 44618, University Library of Munich, Germany, revised 27 Feb 2013.

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