The impact of foreign labour on host country wages: The experience of a southern host, Malaysia

Vol: 
2011-03
Author name: 
Prema-chandra Athukorala
Evelyn S Devadason
Year: 
2011
Month: 
March
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.

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