Economic Impacts of the Quality of Labor Market on Value-Added Agriculture and Economic Growth : Evidence from Malaysia

Hii, Neng Long and Evan, Lau (2022) Economic Impacts of the Quality of Labor Market on Value-Added Agriculture and Economic Growth : Evidence from Malaysia. In: 10th International Borneo Business Conference 2022 (iBBC) 2022), 19-21 September 2022, Raia Hotel & Convention Centre Kuching, Sarawak.

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Abstract

The main objective of this paper is to examine the impacts of quality of the labor market on value-added agriculture and economic growth of Malaysia during 1982-2019. The research methodologies adopted in this study are unit root and stationary test, Johansen and Juselius cointegration test, Granger causality test, variance decomposition, and generalized impulse response function. The empirical results of Model (1) indicate that low education level has negative relationship with value-added agriculture over period of 1982-2019. However, the graph of impulse responses analysis reveal that employed worker with tertiary education level has positive relationship with value-added agriculture but this positive effect does not happen during the period of study based on the Granger causality test. Nevertheless, the variance decomposition results further proves that most of employed foreign worker do not have high education level. Meanwhile, employed worker with tertiary education level only can affect a small percentage of the employed foreign worker in Malaysia. Besides, the empirical results of Model (2) reveal that labour force with tertiary education level does significant positive Granger cause the agricultural GDP especially at 4 th year reach its maximum while the labour force who have secondary education level does negative Granger cause the agricultural GDP in the first 6 years only. Hence, the significant positive effect of tertiary education level does reduce the impacts from negative effect of the secondary education level on agricultural GDP at the beginning period. The results also proves that foreign labour force does not much affect the Malaysia’s agricultural GDP.

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