| After its handover to the People's Republic of China, Macao Special Administrative Region (MASR) has witnessed phenomenal changes in its politics, economy, and people's livelihood. However, along with its rapid economic expansion, labor shortage has become a serious problem affecting Macao's further economic development. The MSAR Government has implemented a policy of introducing foreign labor to ease the human resources bottleneck. Statistics at the end of December, 2008 showed that there were 92,161 non-local workers in Macao, or 28.5% of the total employed population. This figure highlights the importance of foreign labor in Macao's economy. This dissertation attempts to use the theories of labor migration, human capital and economic growth to explore the pattern of labor migration to Macao and its impact on Macao's mini-economy, with the aim to examine the role of external factors in Macao's economy from the perspective of human capital; theoretical models are put forward and empirically tested and tentative conclusions are arrived at for the analysis of migrant labor's role in Macao's economic and social life.In the 400-odd year history since its opening as a free port in 1557, Macao'handover to the motherland on December 20, 1999 certainly marked a new era. The MSAR Government took economic growth as its top priority and liberalized the gaming industry in 2002, a truly ingenious political action. An unprecedented outburst of economic and social vitality swept Macao and from 1999 to 2008, Macao's GDP grew from 47.287 billion patacas to 1,718.67 billion patacas, an average yearly growth rate of 13.3%; its per capita GDP increased from 110,000 patacas to 310,000 patacas, second only to Japan in Asia; unemployment rate dropped from 7% to 3%; total gaming revenue in 2007 exceeded that of Las Vegas, enabling Macao to become the world's largest casino city.An analysis is first conducted from the perspectives of the demand and supply of labor in Macao. The increase of Macao's labor force has been rather slow due to the small size of its population. For example, out of the 6,617 high school graduates in Academic Year 2007/2008, 5,211 went on to college and 822 joined the workforce; in the same period, the number of local students graduating from tertiary education institutions were 3,171. However, vacancies in the job market have increased significantly and by the end of 2007, there were 20,160 vacancies in Macao. It showed that the local labor force is not able to meet the human resources needs for its economic growth both in structure and aggregate number.The total working population of Macao in 2007 was 322,800, with 313,300 employed population, thus the overall labor force participation rate is 70.5%. Macao's labor force is generally characterized by low-level education, with 54.5% only completing junior high school or lower. Most jobs are found in a few economic sectors, and there is structural imbalance in its labor force. About 49% of the employed population are concentrated in three sectors, namely, "community, social and personal services" in the gaming industry (23.4%), "construction" (13.0%), and "Hotel and restaurants management" (12.8). The predominance of one single industry, i.e., the gaming industry, has been the most striking feature of Macao's employment labor market. Furthermore, because the gaming industry offers higher pay and lower educational requirement, the labor shortage and low quality of Macao's population has been exacerbated; meanwhile, structural unemployment remains a salient issue in Macao's labor market. Although unemployment rate fell to 3.1% in 2007, the number of unemployed workers remains fairly constant year by year since the handover at 10,000 to 140, 000 people, with no obvious decrease of the total unemployed population.In the 1980s, to address the shortage of manufacturing labor in Macao, the Portuguese Government of Macao established the legal basis for foreign labor migration to Macao by publication of the relevant legislation in the Government Gazette. Since the handover, with the introduction of competition mechanism into the gaming industry, Macao's economy took off and the demand for labor becomes ever larger. According to statistics, between 2003 and 2007 the employed population of Macau grew by an annual rate of 10%, which is mainly attributed to the rapid growth of foreign labor. From 2003 to 2007, the average growth rate of foreign labor reached 37%, and the total number of foreign labor rose from 1999's 322, 000 to 852,000 by the end of 2007. The ratio of foreign labor in the total employed population was 28.4%; With regard to the sources of migrant labor, labor from mainland China, Hong Kong and Southeast Asia accounted for 60% of the total workforce, mainly in manufacturing, hotel and catering, and construction; In terms of wage levels, foreign workers generally receives a lower pay than the native-born workers, and some foreign workers have to accept longer working hours and unequal treatment.From the perspective of motivations of the migrant foreign labor, the present study examines labor migration to Macao from its neighboring regions by means of establishing the individual decision-making model and extending it to the empirical equation. Relevant statistical data of Macao's economy in 1996-2006 and samples are used for the regression of the migrant foreign labor in Macao. The findings: income, employment opportunities and social network are the motivations of labor migration to Macao, whereas geography and national/ regional border constitutes the two major types of barriers, namely, the natural barrier and institutional barrier.In view of the decisive role of human resources in economic development, whether migrant labor has helped to improve the human resources situation of Macao is of great concern. Both the Romer endogenous growth theory and the Lucas human capital specialization model show that investment in human capital can generate incremental returns of scale. These theoretical models have been used for showing the correlation between the different rates of returns and the different educational levels of migrant workers in Macao and human capital of the migrant labor in various industries are measured and empirically verified. The results showed that from a long-term point of view migrant labor has generally contributed to positive human capital accumulation in Macao; with the expansion of its scale and improvement of its structure, foreign labor has greatly eased the shortage of manpower in the local labor market, providing a huge demographic dividend for Macao.Investigation is made into Macao's overall wage rate and the wage rates of a given industry, as well as the impact of migrant labor on the wage level of local workers. The results show that the import of foreign workers does not necessarily affect the local workers'wage level adversely. In most sectors foreign workers are paid less than local workers, and that on the whole the increase of foreign workers has not brought about obvious negative impact on the local workers'wage level. (Chen Naij & Zhang Feiyan, 2007). The wage discrepancies across industries in Macao are primarily the outcome of the expansion on the scale of the liberalized gambling sector under the market mechanism, without obvious driving effect on other industries. In line with Zhong Xiaohan (2006)'s view, the author has analyzed the migrant labor's impact on Macao's employment and wage rates in the context of international division of labor. Using the micro- labor "moving-in" and "local" job matching model, and on the basis of relevant data from the 1989-2008 period, an empirical study has been conducted into the employment structure of migrant labor in Macao. The findings: the complementariness between the migrant labor and local labor in terms of employment is conducive to efficient human resources allocation and the human capital "dividend" provided by the migrant labor has raised the local community's welfare by means of subsidizing local workers, and has promoted local economic development.The statistical and survey data of Macao's industries from 1990 to 2007 have been analyzed. The empirical study shows that the development of high-tech industry in Macao is not fully matched by its human resource structure and consequently the proportion of high-tech industry in Macao's economy is rather insignificant. In fact, many scholars believe that Macau's economic strength and resources at this stage do not provide fertile soil for the development of hi-tech industry; given the small size of Macau and the lack of high-tech personnel, it is difficult for Macao to acquire top-end hi-tech through R & D and have access to hi-tech market. The future pattern of development of Macao's industrial structure will be largely determined by its existing resources, i.e., gradually from labor-intensive industry to semi-skilled, semi-capital-intensive industry, with the tertiary industry continuing to grow. This means that Macao will need to introduce foreign labor on a substantial scale; in addition, Macao should continue to invest substantial resources in local human resources development for future industrial upgrading, enhancing its competitive advantage, and providing services support. Yet many experts also believe that the introduction of high-end human resources for industrial restructuring and diversification is undoubtedly a short-term expedient. In the long term, Macao's high-level human resources should be home-grown and Macao should spare no efforts to achieve this goal, while the introduction of foreign labor is only auxiliary.The sample data from 1980 to 2006 have been studied using the software EVIEWS to conduct Granger causality test of the two variables, with focus on the theoretical model and empirical verification of the migrant labor's impact on Macao's economic growth. Multi-theoretical study proved that migrant labor into the equation of economic growth will affect the dynamic equilibrium; empirical verification includes Granger test of the causal relationship between labor migration to Macao and local economic growth. The results showed that a two-way causal chain exists between the two variables, an adequate testimony of the driving effect of Macao's economic expansion on the introduction of foreign labor, and at the same time, affirming foreign labor's contribution to the growth of Macao's GDP.Migrant labor has played an important role in the economic and social development of Macao; however, it also give rise to some social problems. For instance, foreign labor has been blamed for being the source of intensified social conflicts, mounting environmental pressures and overburdening urban facilities, as well as soaring real estate prices.From the above analysis, we may draw some tentative conclusions: the human capital accumulation offered by migrant labor to Macao promotes industry upgrading, and the contradiction between the upgraded industrial system and the lagging-behind local human capital can not be solved by introduction of matching foreign labor; industries with heavy concentration of foreign labor are facing fierce competition and difficulty in raising the wage level. Through utilizing the human capital "dividend" provided by the cheap foreign labor to subsidize local labor, Macao's mini-economy has achieved rapid economic growth and improved the overall welfare of society; due to the complementariness of elements in the division of labor, the "spillover effect" and the "learning by doing" capacity building of migrant workers, foreign labor is indispensible for Macao's economic development.Policy recommendations:1. Strengthen the theoretical and policy study on human resources in Macao, with a view to providing strong support for public administration.2. Enact and improve legislations aimed at ensuring the priority of local workers in employment, with a sound supervision and safeguard system duly established.3. Develop and implement scientific medium- and long-term plans on human resources, in order to ensure harmonious relationships between the population, environment, and the various social resources for sustainable development.4. Strengthen the coordination mechanisms between the Government, job intermediaries, capital and labor.5. Improve the labor market information network by building the labor and employment service databases as soon as possible.6. Strengthen the training of non-local labor with the objective of promoting Macao's economic growth and investment and development in human capital.7. Protect the legitimate rights and interests of migrant workers, promote relations between local and non-local workers and build a harmonious society.
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