Assessing the Impact of ASEAN Economic Integration on Labour Markets

ILO Asia-Pacific Working Paper, Forthcoming

68 Pages Posted: 21 Oct 2014

See all articles by Michael G. Plummer

Michael G. Plummer

Johns Hopkins University

Peter A. Petri

Brandeis University - Brandeis International Business School; Brookings Institution; Brandeis University - Department of Economics

Fan Zhai

China Investment Corporation

Date Written: September 1, 2014

Abstract

Enhancing regional economic integration, both across Member States and with their neighbours in the Asia-Pacific region, has become an important priority in Association of Southeast Asian Nations (ASEAN). Building on the ASEAN Free Trade Area, ASEAN has been implementing the ASEAN Economic Community (AEC) since 2007, scheduled for completion in 2015. This study estimates the implications of the regional initiatives on ASEAN Member States using a cutting-edge computable general equilibrium model. In addition to gauging the effects on welfare, trade and economic structure, it considers the ramifications for markets for seven categories of labour defined at the occupational level (three types of skilled labour, three types of semi-skilled labour and unskilled labour). It also includes estimates of the distributional effects of these initiatives for labour compared with other factors (capital and land) and on gender. In general, the paper estimates impressive welfare and export gains from deepening and expanding economic cooperation. These gains are larger than those estimated in other studies because our approach – under the assumption of persistent unemployment for some categories of labour – also models how overall employment would increase as liberalization improves the competitiveness of ASEAN economies. Thus, even though we expect these initiatives to generate large returns to ASEAN countries and to labour overall, it is important for governments to take into account the mixed effects on the distribution of these gains and act accordingly to ensure that the benefits are fairly spread.

Keywords: Regional integration, ASEAN, labor markets, Asia-Pacific, free trade agreements

JEL Classification: F13, F14, F15, F17, O41, O53

Suggested Citation

Plummer, Michael G. and Petri, Peter A. and Zhai, Fan, Assessing the Impact of ASEAN Economic Integration on Labour Markets (September 1, 2014). ILO Asia-Pacific Working Paper, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2512075 or http://dx.doi.org/10.2139/ssrn.2512075

Michael G. Plummer

Johns Hopkins University ( email )

Via Belmeloro 11
40126 Bologna
Italy

Peter A. Petri (Contact Author)

Brandeis University - Brandeis International Business School ( email )

Mailstop 32
Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Brandeis University - Department of Economics

Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

Fan Zhai

China Investment Corporation ( email )

New Poly Plaza, No.1 Chaoyangmen
Beidajie, Dongcheng
Beijing, 100010
China

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