UPSI Digital Repository (UDRep)
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Abstract : Universiti Pendidikan Sultan Idris |
This study aims to investigate the incidence and the outcome of aggregate mismatch
in the labour market among tertiary-educated workers on economic growth, Gross Domestic
Product (GDP) in Malaysia between 1984 - 2016. In addition, the thesis also evaluates long-term
relationships and granger causal between the aggregate mismatch and other macro variables to
Malaysia's economic growth. The aggregate mismatch refers to workers’ own actual qualification
level is either higher or lower than that is required by the job. The study employed econometric
time-series analysis using Vector Error Correction Model (VECM). Apart from the GDP and the
aggregate mismatch, the time-series data over 33 years consist of the other five controlled
variables, i.e.- private consumption, investment, government expenditure, net export and education.
The variables were collected from various sources such as the Departments of Statistic Malaysia and
the World Bank. Four types of analysis were employed - descriptive analysis, integration
analysis (Unit Root Test Augmented Dickey Fuller Unit, Lag Selection and Vector Auto
Regressive) followed by Johansen co-integration analysis and granger causality test. Based on
the descriptive analysis, it was found that on average, 7.7 percent of the
tertiary-educated workers were considered being in mismatched jobs. Subsequently, the
co-integration test showed at least one direction of causation between GDP and the aggregate
mismatch and other variables. The VECM revealed a long-run Granger causality of
aggregate mismatch and other variables toward GDP. In the short term, however, the Wald test
only revealed a bi- directional causality between GDP and the aggregate mismatch. Finally, the
long-run relationship equation showed a significant negative relationship between the aggregate
mismatch and GDP. In conclusion, increasing in the number of mismatched workers at the aggregate
level in the labour market would slow down the country's economic performance as it negatively
affects the growth. It is important, therefore, for stakeholders such as governments, firms
and individuals to play roles in reducing the
mismatch at the macro level.
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