The Impact of Foreign Workers on The Manufacturing Output, Employment and Wages in Malaysia

Abstract

The objectives of this study are to investigate the impact of foreign workers on the manufacturing output, employment and wages. In order to achieve these objectives, the simultaneous equation models are developed and the analyses are based on data from the Industrial Survey conducted by the Department of Statistics Malaysia. The Labor demand models have been derived from the Cobb-Douglas production function. These included the demand function for foreign workers and wage function for local workers. The results from the estimation of the production function show that foreign workers in the category of professional is significantly contributed to the output growth. The demand for foreign workers reveals that the professional is positively related to output level and their respective wage rates. However, they are negatively related to the price of capital and local wage rate. That means the professional of foreign workers are complement with the local w! orkers and capital