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How Much Do Low-skilled Immigrants Contribute to the Thai Economy?: Analysis of Three Methodologies
This paper uses three methodologies to measure the economic impacts and contribution of low-skilled immigration in Thailand, namely, simulation of a macroeconomic model, a growth accounting method, and an econometric method. Both the macroeconomic simulation model and the growth accounting method confirm that immigrants have contributed around 0.75-1 percentage point of real GDP growth. The sector that benefited most was agriculture, where immigrant workers contributed more than 1.33 percent of the growth rate of agricultural production. Our econometric results also showed that a percentage increase of immigrant share (of the total labor force or M/L) also contributed to a reduction of overall labor productivity in the manufacturing sector (by about 0.88-1percent) and the service sector (by about 1.35 percent). In addition, the calculation of the Allen partial elasticity (AES) confirms that there is a high substitution effect between immigrants and natives, especially in the low-skilled sector. Our simulation shows that employing immigrants in the agricultural sector tends to reduce total employment by 0.67 percent and reduce wage rates by around 4.34 percent from the base case. Thailand needs to consider the short-term and long-term implications of bringing in immigrant labor.
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