Local Labor Supply Responses to Immigration

Abstract

How natives adjust is central to an understanding of the impact of immigration in destination countries. Using detailed labor force data for Malaysia for 1990-2010, we provide estimates of native responses to immigration on multiple extensive margins and rare evidence for a developing country. Instrumental variable estimates show that increased immigration to a state causes substantial internal inward migration, consistent with the fact that immigration increases the demand for native workers. Relocating Malaysian workers are accompanied by their spouses (three-quarters of whom are housewives) and children who attend school. We find that these effects are concentrated among middle-and lower-skilled Malaysians.

Malaysian as the Component of Labour Force for Construction Industry in Malaysia

“…Other than that, the employers usually pay the foreign workers with a lower rate of compensation and the whole average wage rate for the sector will deteriorate and the increment is very slow [8]; [16]. This situation will impact the attractiveness of local labours into the industry [6]. Additionally, the failure of the Malaysian Trade Union Congress (MTUC) to persuade the government to stop the inflow of foreign workers into the country which is depressing the wage structure and weakens the incentive to attract local labour [17].…”

“…On the other hand, the monopoly and large availability of migrants becomes one of the factors the hinders the local and new graduates entering the construction industry [4], [12]. The immigration causes substantial internal movement of local from the construction industry [6]. According to the Malaysian Employers Federation (MEF) [19] the labour intensive sector like construction not attractive to local workers and thus rely heavily on foreign workers resulting in 70 percent of this sector to be monopolised by foreign workers.…”

“…Additional, the poor images of the construction industry in the eyes of local workers make it more serious [4], [21]. The reliance on the foreign workers made the industry only for low value-added activities that only require lower levels of skills and offer low remuneration [6]. Mohamed et al, [16] reported that the possible uncertainty at the same time by increased such activities likes crime, culture and illegal strikes by foreign workers.…”

“…Despite, Malaysia realizing that the reliance towards the foreign workers may provide an impact to the final delivery to become a high-income country by 2020 [3], the decrease in the level of interest among the native talent and high turnover in the construction industry has driven the employers to depend on foreign workers [5]. However, problems resulting from the massive numbers of foreign workers have caused the increasing demand for local labour [6].…”

Do Immigrants Take or Create Residents’ Jobs? Evidence from Free Movement of Workers in Switzerland*

“…3 Our paper contributes to the body of literature on the labor market effects of the recent immigration wave to Switzerland. 4 The existing 3 A small number of other studies also exploit source country information to construct shift-share instruments for immigration (Friedberg, 2001;Peri, 2011;Del Carpio et al, 2015). 4 There are also studies that have looked at the effects of the immigration wave on residents beyond the Swiss labor market.…”