Foreign Workers, Foreign Multinationals, and Wages by Occupation and Sex in Malaysia’s Manufacturing Plants during the mid-1990s

This paper investigates the effects of foreign worker shares and MNE ownership on wages paid to males and female in five occupation groups in Malaysian manufacturing plants during 1994-1996, an important period coinciding with the end of the decade-long economic boom that preceded the Asian financial crisis. Random effects estimates of Mincer-type equations by occupation group and sex in large samples of all industries and in seven industry-level samples both suggest that use of foreign workers generally had insignificant effects on plant wages for most occupation-sex-(and industry) combinations. When significant, these estimates suggested that plants with relatively large shares of same sex-same occupation foreign worker shares tended to pay relatively high wages to relatively high wages to high-wage workers but relatively low wages to low-wage workers. The few significant effects of foreign workers of the different sex and same occupation and in different occupations were less systematic. Conditional MNE-local wage differentials were almost always positive when significant. Results from large samples of all industries combined indicate a strong tendency for MNEs to pay relatively high wages. However, allowing all slope coefficients to vary among seven industry groups suggests that MNE-local differentials were almost always insignificant in three industries and consistently significant in only one.