The impact of foreign labour on average real wages of residents: evidence from Malaysia's construction sector
by Atif Awad; Ishak Yussof
International Journal of Productivity and Quality Management (IJPQM), Vol. 28, No. 2, 2019

Abstract: In this study, instead of examining the impact of migrant workers on the real wages of natives, which has already been extensively addressed, we have estimated the impact of migrant workers on the average real wages of residents (both natives and earlier immigrants). We examine whether the impact of migrant workers on the average real wages of residents varies over time as well as varying across occupations. We employ the pooled mean group (PMG) technique on panel data for four Malaysian construction subsectors during the period 1990 to 2010. The results show that over time, all foreign labour as well as unskilled migrant workers have considerable and positive impacts on the real wages of all resident workers. However, in the adjustment period, in the short-run, only the wages of unskilled workers respond positively and significantly to foreign workers. Given both the unfavourable work conditions for natives as well as the significance of this sector to the overall economy, policy makers should facilitate the flow of migrant workers to this sector.

Online publication date: Fri, 11-Oct-2019

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