Title: The impact of foreign labour on average real wages of residents: evidence from Malaysia's construction sector

Authors: Atif Awad; Ishak Yussof

Addresses: Department of Finance and Economics, Faculty of Business Administration, University of Sharjah, UAE ' Faculty of Economics and Management, School of Economics, The National University of Malaysia, 43600 UKM Bangi, Malaysia

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.

Keywords: foreign labour; wages; working condition; demand and supply of labour.

DOI: 10.1504/IJPQM.2019.102918

International Journal of Productivity and Quality Management, 2019 Vol.28 No.2, pp.183 - 209

Received: 29 Dec 2017
Accepted: 14 Jul 2018

Published online: 11 Oct 2019 *

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