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

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

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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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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