Malta: 2020 Selected Issues
IMF Staff Country Reports, April 10, 2020
Source details
- Canonical URL
- Malta: 2020 Selected Issues
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Bibliographic details
- Published: April 10, 2020
- Series: IMF Staff Country Reports
Executive summary and main findings
- The Selected Issues paper analyses immigration and the labor market in Malta.
- Immigration has been positive for Malta, helping boost growth, employment, productivity and incomes.
- The increased availability of foreign labor has helped contain wage inflation (and hence probably also price inflation) in recent years, contributing to maintain competitiveness in the face of a booming economy.
- The results suggest that foreign workers have helped contain aggregate wage inflation.
Empirical approach and drivers of nominal wage growth
- Baseline regression regressors:
- the headline unemployment rate
- lagged core inflation
- labor productivity growth
- the share of foreign workers in total employment
- the first and fourth lags of the dependent variable
- Results across some selected models suggest that foreign labor has helped contain wage inflation in recent years.
- A decomposition analysis is conducted to identify the drivers of nominal wage growth and to calculate the contributions of each of the independent variables included in the regressions.
Policy-relevant implications (implied by findings)
- Maintaining sufficient availability of foreign labor can help contain aggregate wage inflation and support competitiveness amid strong economic expansion.
- Monitoring the share of foreign workers in total employment is important for understanding wage dynamics and inflationary pressures.
- Policies that consider interactions among unemployment, core inflation momentum, productivity growth, and foreign labor share can improve wage-inflation outlook assessments.
Content in this bundle
- Malta: 2020 Selected Issues; IMF Country Report No. 99; March 25, 2020