Hiring Skilled Workers and Roles of Free Trade Agreements and Global Production Sharing: Evidence of Thai Manufacturing
Keywords:
Global Production Sharing (GPS), Trade liberalization, Free Trade Agreement (FTA) Skilled workers, Thai ManufacturingAbstract
The paper examines the extent to which firms hire skilled workers with a view to informing two policy debates about ongoing economic globalization, i.e. the impact of trade liberalization under free trade agreements (FTAs) and that of participating in global production sharing (GPS). Panel data econometric analysis is undertaken using a firm-level panel dataset compiled from three censuses of Thai manufacturing (2006, 2011 & 2016). Our key findings suggest that while competitive pressure from abroad is one crucial factor driving firms to be active in hiring skilled workers and staying competitive, using FTAs to create competitive pressure must be undertaken with caution as its effectiveness hinges on how their commitment has been made. Participating in GPS could influence firms to hire more skilled workers. This points to a mutual benefit to be shared across countries by participating in GPS. Enlarging the pool of skilled workforces must go hand in hand with promoting the use of skilled workers by firms to avoid worsening existing labour mismatching challenges.
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