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Labour Force Effects To Current Account Movement Of Asean + 6 Countries

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  • NI PUTU WIWIN SETYARI

    () (Economics and Business Faculty, Udayana University, Jalan P.B Sudirman, Denpasar, Bali 80232, Indonesia, Telephone: (0361) 235970)

  • Tri WIDODO

    () (Economics and Business Faculty, Gadjah Mada University, Jl. Sosio Humaniora Bulaksumur, Yogyakarta 55281, Indonesia)

  • M. EDHIE PURNAWAN

    () (Economics and Business Faculty, Gadjah Mada University, Jl. Sosio Humaniora Bulaksumur, Yogyakarta 55281, Indonesia)

Abstract

Heckscher-Ohlin-Mundell framework suggests that if a country has unexpectedly increased the permanent labour force, there will be a change in the production structure. Increases in the relative proportion of labour-intensive product demand occur and, hence, decrease the need for investment relative to domestic saving, and encourage the current account surplus. This paper tries to fill the empirical studies gap on the effects of the labour force, especially its utilization in the data panel of ASEAN + 6 countries using the generalized method of moments (GMM) used to capture the unobserved heterogeneity and endogeneity across countries that often arise in a panel data model. The estimation result shows that the labour force has an asymmetric shock and it only affects the country of origin, even when the financial institution deepening as a control variable is included. The analysis also indicates that labour regulations in these countries tend to be rigid because the speed with which the current account adjusts is relatively slow.

Suggested Citation

  • NI PUTU WIWIN SETYARI & Tri WIDODO & M. EDHIE PURNAWAN, 2016. "Labour Force Effects To Current Account Movement Of Asean + 6 Countries," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 18, pages 183-209, December.
  • Handle: RePEc:aic:revebs:y:2016:j:18:widodot
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    References listed on IDEAS

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    1. Glick, Reuven & Rogoff, Kenneth, 1995. "Global versus country-specific productivity shocks and the current account," Journal of Monetary Economics, Elsevier, vol. 35(1), pages 159-192, February.
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    More about this item

    Keywords

    saving–investment; current account adjustment; labour force shocks;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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