Abstract
Low income and high unemployment in labour sending countries and high income and low unemployment in labour receiving countries are frequently justified as push and pull factors of migrant workers, respectively. Indonesia is the main labour-exporting country to Malaysia but the studies on the push factors in Indonesia and the pull factors in Malaysia are very limited. This paper has three objectives. The first objective is to examine the long-run relationship among income and unemployment in Indonesia and Malaysia and the Indonesian migrant workers in Malaysia. This is followed by examining the causality between the variables in the second objective, and the extent to which income and unemployment in Indonesia and Malaysia determine the Indonesian migrant workers in Malaysia in the third objective. Time series data were employed and analysed by utilizing the Vector Autoregressive (VAR) framework. The findings show a long-run relationship among income and unemployment in Indonesia and Malaysia and the Indonesian migrant workers in Malaysia. Only unidirectional causality is found in the long-run, which is from income and unemployment in Indonesia and Malaysia to Indonesian migrant workers in Malaysia. The findings also show that the Indonesian migrant workers in Malaysia are significantly determined by income and unemployment, positively in the case of Indonesia, and negatively, in Malaysia.
Highlights
Many factors determine the supply of international migrant workers, which are grouped into factors in home countries, factors in host countries and a combination of these two factors
Gross Domestic Product (GDP) per capita and GDP data are published by the International Monetary Fund (IMF) (2012), unemployment data was obtained from the Asian Development Bank (ADB) publication (2012) while the Indonesian migrant workers data was published by the Ministry of Home Affairs Malaysia
This study examined the long-run relationship among the push factors represented by income and unemployment in Indonesia and the pull factors represented by income and unemployment in Malaysia on the Indonesian migrant workers in Malaysia
Summary
Many factors determine the supply of international migrant workers, which are grouped into factors in home countries (push factors), factors in host countries (pull factors) and a combination of these two factors. Said et al (n.d.) had studied this issue but applied unemployment in Indonesia as a push factor and income per capita in Malaysia as a pull factor of Indonesian migrant workers in Malaysia. They applied the traditional regression approach instead of the VAR framework. They failed to detect whether their regression results were spurious or not. They reported that the effect of unemployment in Indonesia and income per capita in Malaysia on Indonesian migrant workers in Malaysia are both positive and significant
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