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CGE modeling of the impact of skilled labor movements in ASEAN Economic Community focusing on telecommunication industry

Sudtasan, Tatcha and Suriya, Komsan (2014): CGE modeling of the impact of skilled labor movements in ASEAN Economic Community focusing on telecommunication industry.

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Abstract

This paper investigates the impact of skilled labor movements in ASEAN Economic Community (AEC) on nationwide economy of Thailand using Computable General Equilibrium model. The paper mainly focuses on the labor movement in telecommunication industry. The model consists of three steps. First, it simulates the impact of raising minimum wage to THB300 and raising salary of bachelor graduates to THB15,000 across-the-board and over the country according to the Raising Income Policy (RIP) of the Thai government. Second, it figures out the impact of the skilled labor movement in telecommunication sector among AEC member countries. Last, it includes the impact of skilled labor movements in 8 occupations that are allowed by the AEC agreement. The results reveal that the RIP causes negative impact to the Thai economy due to the rising costs of production that cannot be compensated by the increasing consumption. Inward skilled labor movement to Thailand in the telecommunication sector leads to the increasing income of engineers and related skilled workers in the country. This yields the positive impact to the economy due to the increasing income of the middle-class people while costs of production do not increase much. The inward skilled labor movements in all 8 occupations will even yield more positive impacts to the Thai economy. However, the positive impacts of the skilled labor movements in AEC cannot compensate the negative impacts of the RIP applied earlier. Therefore, Thailand cannot expect that AEC will boost its economy up to the level before the implementation of RIP.

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