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

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  • Prema-chandra Athukorala
  • Evelyn S Devadason

Abstract

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.

Suggested Citation

  • Prema-chandra Athukorala & Evelyn S Devadason, 2011. "The Impact of Foreign Labour on Host Country Wages: The Experience of a Southern Host, Malaysia," Departmental Working Papers 2011-03, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2011-03
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    Cited by:

    1. Ramstetter, Eric D., 2014. "Exporting, Education, and Wage Differentials between Foreign Multinationals and Local Plants in Indonesian and Malaysian Manufacturing," AGI Working Paper Series 2014-03, Asian Growth Research Institute.
    2. Rasiah, Rajah., 2014. "Economic implications of ASEAN integration for Malaysia's labour market," ILO Working Papers 994865243402676, International Labour Organization.
    3. Katikar Tipayalai, 2020. "Impact of international labor migration on regional economic growth in Thailand," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-19, December.
    4. Nurrachmi, Rininta & Mad-Ahin, Ashanee & Waeowanjit, Phimpaporn & Kareemarif Arif, Naz Abdul, 2012. "Article Review on World Bank Report, Optimal Design for a Minimum Wage Policy in Malaysia," MPRA Paper 44618, University Library of Munich, Germany, revised 27 Feb 2013.
    5. repec:ilo:ilowps:486524 is not listed on IDEAS
    6. Ramstetter, Eric D., 2016. "Foreign Workers, Foreign Multinationals, and Wages by Occupation and Sex in Malaysia’s Manufacturing Plants during the mid-1990s," AGI Working Paper Series 2016-23, Asian Growth Research Institute.
    7. Ramstetter, Eric D., 2017. "Foreign Workers, Foreign Multinationals, and Wages after Controlling for Occupation and Sex in Malaysia’s Manufacturing Plants during the mid-1990s," AGI Working Paper Series 2017-13, Asian Growth Research Institute.
    8. Fariastuti Djafar & Mohd Khairul Hisyam Hassan, 2013. "Does Trade With Labour Sending Countries Reduce Demand for Migrant Workers: A Lesson from Malaysia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(10), pages 1325-1336, October.
    9. Cassey Lee, . "Globalization and Wage Inequality: Firm-Level Evidence from Malaysia," Chapters, in: Chine Hee HAHN & Dionisius Narjoko (ed.), Impact of Globalization on Labor Market, chapter 8, pages 197-231, Economic Research Institute for ASEAN and East Asia (ERIA).

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    More about this item

    Keywords

    International labour migration; foreign workers; wages; Asia; Malaysia;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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