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

  • Prema-chandra Athukorala
  • Evelyn S Devadason

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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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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  1. 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.
  2. 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.
  3. repec:cup:cbooks:9780521194259 is not listed on IDEAS
  4. 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, June.
  5. 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.
  6. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
  7. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
  8. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
  9. Frank Kleibergen & Richard Paap, 2003. "Generalized Reduced Rank Tests using the Singular Value Decomposition," Tinbergen Institute Discussion Papers 03-003/4, Tinbergen Institute.
  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. Aslan Zorlu & Joop Hartog, 2005. "The effect of immigration on wages in three european countries," Journal of Population Economics, Springer, vol. 18(1), pages 113-151, December.
  12. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
  13. Hanson, Gordon H., 2010. "International Migration and the Developing World," Handbook of Development Economics, Elsevier.
  14. 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.
  15. repec:cup:cbooks:9780521142489 is not listed on IDEAS
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