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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.

Suggested Citation

  • Prema-chandra Athukorala & Evelyn S Devadason, 2011. "The Impact of Foreign Labour on Host Country Wages: The Experience of a Southern Host, Malaysia," Departmental Working Papers 2011-03, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2011-03
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    1. repec:ilo:ilowps:486524 is not listed on IDEAS
    2. Ramstetter, Eric D., 2016. "Foreign Workers, Foreign Multinationals, and Wages by Occupation and Sex in Malaysia’s Manufacturing Plants during the mid-1990s," AGI Working Paper Series 2016-23, Asian Growth Research Institute.
    3. Ramstetter, Eric D., 2017. "Foreign Workers, Foreign Multinationals, and Wages after Controlling for Occupation and Sex in Malaysia’s Manufacturing Plants during the mid-1990s," AGI Working Paper Series 2017-13, Asian Growth Research Institute.
    4. Ramstetter, Eric D., 2014. "Exporting, Education, and Wage Differentials between Foreign Multinationals and Local Plants in Indonesian and Malaysian Manufacturing," AGI Working Paper Series 2014-03, Asian Growth Research Institute.
    5. Rasiah, Rajah., 2014. "Economic implications of ASEAN integration for Malaysia's labour market," ILO Working Papers 994865243402676, International Labour Organization.
    6. 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.
    7. Cassey Lee, . "Globalization and Wage Inequality: Firm-Level Evidence from Malaysia," Chapters, in: Chine Hee HAHN & Dionisius Narjoko (ed.), Impact of Globalization on Labor Market, chapter 8, pages 197-231, Economic Research Institute for ASEAN and East Asia (ERIA).
    8. Katikar Tipayalai, 2020. "Impact of international labor migration on regional economic growth in Thailand," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-19, December.
    9. 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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    More about this item

    Keywords

    International labour migration; foreign workers; wages; Asia; Malaysia;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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