IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v13y2025i5p127-d1650480.html
   My bibliography  Save this article

Asymmetric Effects of Foreign Worker Employment on Sectoral Labor Productivity: A Malaysian Perspective

Author

Listed:
  • Neng Long Hii

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia)

  • Evan Lau

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia)

Abstract

This study examines the asymmetric effects of foreign worker employment and low educational attainment on labor productivity across Malaysia’s three main economic sectors—agriculture, industry, and services—from 1991 to 2019 using the nonlinear autoregressive distributed lag (NARDL) model. Three sectoral models are estimated to capture how overdependence on foreign workers and low-skilled local labor influences productivity. Model 1 for agriculture underscores positive variations vis-à-vis how foreign worker employment boosts agricultural productivity in both the short and long term. However, negative variations lead to diminished productivity in the long run. Primary education negatively affects long-term agricultural productivity. In Model 2 for industry, neither foreign worker employment nor low educational attainment significantly affects productivity. Model 3 for services reveals a short-term boost in productivity with increased foreign workers’ employment, whereas reduced employment enhances long-term productivity. The absence of formal education is detrimental to long-term service productivity, while primary education affects it negatively in the short term. NARDL multiplier graphs and Wald tests confirm significant long-run asymmetric effects of foreign labor in the agriculture and services sectors. The findings highlight the need for Malaysia to reduce reliance on low-skilled labor and accelerate its transition toward a high-skilled workforce to sustain productivity growth and economic competitiveness.

Suggested Citation

  • Neng Long Hii & Evan Lau, 2025. "Asymmetric Effects of Foreign Worker Employment on Sectoral Labor Productivity: A Malaysian Perspective," Economies, MDPI, vol. 13(5), pages 1-21, May.
  • Handle: RePEc:gam:jecomi:v:13:y:2025:i:5:p:127-:d:1650480
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/13/5/127/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2227-7099/13/5/127/
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:13:y:2025:i:5:p:127-:d:1650480. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.