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The Economic Impacts of Migrant Maids in Malaysia

Demand for migrant maids by households in Malaysia has increased rapidly as more married women choose to participate in the workforce. Simple comparisons of households with maids and those without suggest that hiring maids raises female labour force participation rates of their employers by 26 percentage points. But such comparisons are not of like with like because households that employ maids differ in many ways from those who do not. When propensity score matching (PSM) methods are used to estimate the treatment effect of having a foreign maid the rise in female labour force participation is estimated to be only 18 percentage points in 1993/94. Moreover, this treatment effect appears to have fallen to only 13 percentage points by 2004/05. This decline is not apparent when simpler but potentially biased methods are used to estimate treatment effects. The small impact of hiring maids suggests financial losses to the host households and higher leisure time for Malaysian women. Another side effect of hiring migrant maids may be that human capital formation is negatively influenced, since these foreign maids have lower education levels than the mothers of the children they are employed to look after. This is a feature in many households in Malaysia where the inputs into children‟s human capital formation include maids and private tutors, in addition to the more typical inputs of parents and teachers. Previous studies of these atypical inputs from other Asian countries ignore the cumulative nature of learning by just examining contemporaneous impacts of maids, private tutoring and maternal employment. In this thesis, especially collected retrospective data are used to examine impacts on academic performance of Malaysian children in Year 6 (ages 12 to 13). The results suggest children from households that have ever had a foreign maid have higher Year 6 results, with maid impacts having a long lag. Private tutoring in the three years prior to Year 6 has significant positive impacts on academic results but earlier tutoring is associated with poorer results. When effects at various quantiles are studied, the positive impact of maids and private tutoring is most apparent for students below the median. Hiring foreign maids in Malaysia also has impacts on the maids themselves and their families in their country of origin (which is predominantly Indonesia). To examine the effect of this temporary emigration to Malaysia on income levels of the emigrant and the migrant-sending households a survey of Indonesian maids and factory workers in Malaysia was conducted by the author of this thesis. Data from this survey were then combined with data from three rounds of the Indonesian Family Life Survey (IFLS) to estimate that these young women may gain an additional US$80 to US$130 per month compared to earnings had they stayed in Indonesia. The decision to remit depends on duration and earnings in Malaysia more than on household characteristics in Indonesia. The main use of remittances is to accumulate fixed assets in Indonesia. Fixed effects models of household expenditure and assets using three rounds of IFLS data also confirm that the main impact of migration and remittances is on assets rather than consumption, and is more apparent for urban households than for rural households.
Type of thesis
Tan, P. L. (2011). The Economic Impacts of Migrant Maids in Malaysia (Thesis, Doctor of Philosophy (PhD)). University of Waikato, Hamilton, New Zealand. Retrieved from https://hdl.handle.net/10289/5366
University of Waikato
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