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    What Explains the Increase in the Labor Income Share in Malaysia?

    Ng, Allen; Theng, Tan Theng; Gen, Tan Zhai | November 2018
    Abstract
    Labor income shares have been falling in many advanced and emerging economies within the last few decades, partly as a result of a combination of impacts from technology and increased global integration. This in turn is associated with the relatively slow growth of wages, especially for medium-skilled workers, and the worsening of the income inequality in these economies. In contrast, Malaysia’s labor income share has been increasing since 2005, together with a reduction in income inequality. We investigate this development by exploring the differences in trends of the labor income shares across different economic sectors and firm sizes and identifying factors that could explain the increase in the labor income share in Malaysia. We find that the increase is mainly due to the growing importance of more traditional service subsectors and SMEs in the economy. This in turn is associated with greater reliance on low-skilled foreign workers during this period. These findings have important policy implications for Malaysia, including the potential trade-off between driving labor productivity and fostering inclusiveness. This contrarian trend offers insights that could be relevant to the experiences of, and policy choices available to, other emerging economies facing deindustrialization.
    Citation
    Ng, Allen; Theng, Tan Theng; Gen, Tan Zhai. 2018. What Explains the Increase in the Labor Income Share in Malaysia?. © Asian Development Bank Institute. http://hdl.handle.net/11540/9364.
    Keywords
    Development Economics
    Regional Economic Development
    Economic Impact
    Asian Development Bank
    Development
    Macroeconomic
    Macroeconomic Analysis
    Macroeconomic Framework
    Macroeconomic Models
    Macroeconomic Performance
    Macroeconomic Planning
    Macroeconomic Policies
    Macroeconomic Reform
    Macroeconomic Stabilization
    Economies in transition
    Economic agreements
    Development indicators
    ADB
    Economic development
    Gross domestic product
    Employment
    Economic forecast
    Economic indicators
    Growth models
    Gross domestic product
    Macroeconomics
    Economic forecast
    Social condition
    Economic dependence
    Economic assistance
    Comparative economics
    Regional economics
    Economic development projects
    Open price system
    Price fixing
    Price regulation
    Consumer price indexes
    Financial crisis
    Labor economics
    Regional economics
    Turnover
    Economic survey
    Income Distribution
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    Citable URI
    http://hdl.handle.net/11540/9364
    Metadata
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    adbi-wp894.pdf (1.181Mb)
    Author
    Ng, Allen
    Theng, Tan Theng
    Gen, Tan Zhai
    Theme
    Economics
    Development
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise