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

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  • Prema-chandra Athukorala
  • Evelyn S Devadason

Abstract

This paper investigates the impact of foreign labour on domestic manufacturing wages through a case study of Malaysia, a country where foreign labour immigration 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 labour on the growth of unskilled-worker wages, but the magnitude of the impact is rather small.

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File URL: https://crawford.anu.edu.au/acde/publications/publish/papers/wp2011/wp_econ_2011_03.pdf
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Bibliographic Info

Paper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2011-03.

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Length: 25 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:pas:papers:2011-03

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Keywords: International labour migration; foreign workers; wages; Asia; Malaysia;

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References

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  1. Hanson, Gordon H., 2010. "International Migration and the Developing World," Handbook of Development Economics, Elsevier.
  2. Solimano,Andrés, 2010. "International Migration in the Age of Crisis and Globalization," Cambridge Books, Cambridge University Press, number 9780521142489, April.
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  5. Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
  6. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
  7. Hartog, Joop & Zorlu, Aslan, 2002. "The Effect of Immigration on Wages in Three European Countries," IZA Discussion Papers 642, Institute for the Study of Labor (IZA).
  8. 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.
  9. Addison, Thomas & Worswick, Christopher, 2002. "The Impact of Immigration on the Earnings of Natives: Evidence from Australian Micro Data," The Economic Record, The Economic Society of Australia, vol. 78(240), pages 68-78, March.
  10. Roberto Pedace, 1998. "The Impact of Immigration on the Labor Market for Native-Born Workers: Incorporating the Dynamics of Internal Migration," Eastern Economic Journal, Eastern Economic Association, vol. 24(4), pages 449-462, Fall.
  11. Timothy J. Hatton & Jeffrey G. Williamson, 2008. "Global Migration and the World Economy: Two Centuries of Policy and Performance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582775, December.
  12. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
  13. Solimano,Andrés, 2010. "International Migration in the Age of Crisis and Globalization," Cambridge Books, Cambridge University Press, number 9780521194259, April.
  14. Prema-chandra Athukorala, 2006. "International Labour Migration in East Asia: trends, patterns and policy issues," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 20, pages 18-39, 05.
  15. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
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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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