ASEAN-3-Malaysia international migration and real wage convergence
ASEAN-3-Malaysia international migration and real wage convergence

Summary/Abstract: This paper attempts to investigate the effect of international migration from the ASEAN-3, namely, Indonesia, Thailand and the Philippines into Malaysia on the wage ratio between these countries and Malaysia. The analysis within OLS model uses data of 1990-2008 period collected from various sources. The analyses are carried out for the overall Malaysian economy and its three subsectors, namely manufacturing, construction and agriculture sectors. The dependent variable is the wage ratio, whereas the independent variables are the migration ratio, economic openness, years of schooling and time dummy. The results of modelling for each of the studied countries have been defined. The results for the Indonesia-Malaysia wage ratio model show that the migration ratio has negative and significant impacts on the wage ratio for the overall Malaysian economy, the construction sector and the agriculture sector. The results for the Philippines-Malaysia wage ratio model also show the negative effect of the migration ratio on the wage ratio for the overall economy and all its sectors. However, the results for the Indonesia-Malaysia wage ratio model demonstrate that the negative effects occur only for the overall economy and the manufacturing sector. This reflects that an increase in the international migration from the ASEAN-3 will make the wages more diverge between these countries and Malaysia respectively.

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