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The Demand for Foreign Workers in the Manufacturing Sector in Malaysia

Author

Listed:
  • Bachtiar, Nasri

    (Fakultas Ekonomi Universitas Andalas Kampus Unand Limau Manis, Padang 25163 INDONESIA)

  • Fahmy, Rahmi

    (Fakultas Ekonomi Universitas Andalas Kampus Unand Limau Manis, Padang 25163 INDONESIA)

  • Ismail, Rahmah

    (Pusat Pengajian Ekonomi Fakulti Ekonomi dan Pengurusan Universiti Kebangsaan Malaysia 43600 UKM Bangi Selangor MALAYSIA)

Abstract

The objective of this study is to investigate the demand for foreign workers in the manufacturing sector in Malaysia. In order to achieve this objective, the simultaneous equation model is developed and the analyses are based on data from the Industrial Survey conducted by the Department of Statistics Malaysia for the period of 1994-2005. The Labor demand model is derived from the Cobb-Douglas production function. The results from the estimation of the production function show that foreign workers in the category of professional significantly contributed to the output growth of ISIC 35, ISIC 36 and ISIC 38, while skilled workers and technical-supervisors also give a significant contribution to output growth in ISIC 31. The demand for foreign workers reveals that professionals and technical-supervisors are positively related to output level and wage rates. However, they are negatively related to the price of capital and local wage rate. It means that the professional and technical-supervisor foreign workers complement the local workers and capital.

Suggested Citation

  • Bachtiar, Nasri & Fahmy, Rahmi & Ismail, Rahmah, 2015. "The Demand for Foreign Workers in the Manufacturing Sector in Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 49(2), pages 135-147.
    • Handle: RePEc:ukm:jlekon:v:49:y:2015:i:2:p:135-147
    DOI: http://dx.doi.org/10.17576/JEM-2015-4902-11
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    References listed on IDEAS

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    Cited by:

    1. Saffiah Mohd Nor & Geetha Subramaniam & Zahariah Sahudin, 2023. "The Effects of Foreign Labor on Labor Productivity in Construction Industries," Information Management and Business Review, AMH International, vol. 15(2), pages 116-127.

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    Keywords

    Demand; foreign workers; output; wage;
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