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This thesis utilises Productivity and Investment Climate Survey (PICS) 2007 data to explore native and immigrant wage determinants and wage differentials in Malaysia. The Oaxaca decomposition analysis is conducted by adapting Oaxaca and Ransom (1994) and Fortin (2008) with quantile regression to identify the non-discriminatory wage structure and the components of the wage differentials along the income distribution, making this as one of the contributions of this thesis. It then further explores the unexplained component of wage differentials by investigating the causes of educational mismatch and the effect of educational mismatch on native and immigrant wages. Findings show that the educational mismatch gives dissimilar effect on native and immigrant wages. Interestingly, the educational mismatch potentially widens the native-immigrant wage differentials. Further, this thesis explores the labour demand-side effect on native and immigrant wages. This thesis applies the dominance and decomposition analyses to identify and decompose the effect of individual and firm characteristics on wage separately. The results suggest that native wage is mostly determined by individual characteristics. On the other hand, firm and regional characteristics mostly determine the immigrant wage levels. This thesis establishes and enhances our understanding on the wage determinants and wage differentials that exist between native and immigrant as well as provides an empirical evidence of the educational mismatch and firm characteristics effects on wages of native and immigrant workers in Malaysia. |
