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Journal of Economic Integration 2017 September;32(3) :723-758.
DOI: https://doi.org/10.11130/jei.2017.32.3.723
Labour Market Integration with the World: Case of Singapore
Shandre Mugan Thangavelu 
Institute for International Trade, University of Adelaide, Australia
Corresponding Author: Shandre Mugan Thangavelu ,Tel: +61 8 83136900, Email: Shandre.Thangavelu@Adelaide.edu.au
Copyright ©2017 Journal of Economic Integration
ABSTRACT
This study analyses the effects of labour market integration on the domestic economy. We explore the effects of skilled and unskilled foreign labour on the sustainability of a small open economy with innovation and growth. Welfare implications such as Gross Domestic Product growth and wage inequality are explicitly modelled in a general equilibrium framework. The model is applied to a small open economy such as Singapore to derive key policy implications to balance economic growth with skilled workers and innovation activities in the economy. The study critically examines the foreign workers’ policy in the Singaporean economy in terms of allowing both skilled and unskilled workers into the domestic labour market. The results of the model indicate that balancing foreign skilled and unskilled labour, with the development of indigenous innovation capabilities, is crucial to maintain strong, sustainable growth in the domestic economy. The results of the model also indicate that a labour market policy that allows more skilled workers tends to increase the supply of labour and reduce the skilled wage gap in the economy.

JEL Classification
E69: Other
J61: Geographic Labor Mobility; Immigrant Workers
O41 : One, Two, and Multisector Growth Models
Keywords: Growth | Immigration | and Innovation
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