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Labour Market Integration with the World: Case of Singapore

Author

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  • Thangavelu, Shandre Mugan

    (Institute for International Trade, University of Adelaide, Australia)

Abstract

This study analyses the effects of labour market integration on the domestic economy. We explore the effects of skilled and unskilled foreign labour on the sustainability of a small open economy with innovation and growth. Welfare implications such as Gross Domestic Product growth and wage inequality are explicitly modelled in a general equilibrium framework. The model is applied to a small open economy such as Singapore to derive key policy implications to balance economic growth with skilled workers and innovation activities in the economy. The study critically examines the foreign workers’ policy in the Singaporean economy in terms of allowing both skilled and unskilled workers into the domestic labour market. The results of the model indicate that balancing foreign skilled and unskilled labour, with the development of indigenous innovation capabilities, is crucial to maintain strong, sustainable growth in the domestic economy. The results of the model also indicate that a labour market policy that allows more skilled workers tends to increase the supply of labour and reduce the skilled wage gap in the economy.

Suggested Citation

  • Thangavelu, Shandre Mugan, 2017. "Labour Market Integration with the World: Case of Singapore," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 32(3), pages 723-758.
  • Handle: RePEc:ris:integr:0725
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    References listed on IDEAS

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    More about this item

    Keywords

    Growth; Immigration and Innovation;

    JEL classification:

    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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