Assessing the impact of foreign workers on wages in Malta

Abstract

A vast literature on the impact of immigration on wages exists, however in the local context this area remains significantly unexplored. After joining the European Union (EU) in 2004, Malta has experienced a significant increase in the quantity of foreign workers, reaching 67,596 by 2019. This study evaluates the influence of foreign workers on wages in Malta, in two main occupation groups used as a proxy for skill: the elementary occupations and the professional occupations. A significant rise in the quantity of foreign workers was noticed in the aftermath of the financial crisis, for both occupation groups. Thus, the impact was assessed for two different periods being, before and after the crisis. The main findings show that in elementary occupations, the increase in foreign workers had an insignificant influence on wages in the period leading up to the financial crisis, which changed to a small but significant negative influence after the financial crisis. Whereas, in professional occupations, with an increase in foreign workers, wages experienced a small but significant positive change in the period preceding the financial crisis, which changed to insignificant thereafter. Overall, the main findings comply with previous literature, and suggest that the impact of foreign workers on wages in the local context, was either small or insignificant.