Economic Impacts of Skilled Labor Mobility within the ASEAN Economic Community

This paper investigates the potential impacts, on ASEAN member economies, of skilled labor mobility under the ASEAN Economic Community’s (AEC) Mutual Recognition Arrangements (MRAs) on professional services. The MRAs allow ASEAN member countries to recognize each other’s professional licensing or conformity assessments, thereby facilitating intra-ASEAN skilled labor mobility. So far, 8 MRAs on professional labor services have been agreed upon, namely: accounting, architecture, dentistry, engineering, medicine, nursing, surveying qualifications, and tourism professionals. As far as we are aware, no prior study has analyzed how freer flow of skilled professionals within ASEAN might impact each ASEAN-member economy, and how such impacts may reverberate to both regional and global economies. We fill this research gap and contribute to policy research in two ways. First, we take advantage of the GTAP Center’s recently updated global bilateral migration and remittances (GMig2) data, with a 2011 base year, to find out the extent of bilateral skilled labor flows within the ASEAN region. Second, we use the GMig2 model—a variant of the GTAP model that explicitly accounts for bilateral labor flows and remittances—to quantify the potential economic effects of intra-ASEAN skilled labor mobility. Our simulation results suggest that GDP expands for ASEAN-member countries as skilled labor mobility not only addresses the shortages and surpluses of skilled labor within the region, but also spurs consumption on the back of higher remittances sent by migrant workers.