Labour Force Effects To Current Account Movement of ASEAN 6 Countries

Heckscher-Ohlin-Mundell framework suggests if a country has increased the permanent labor force unexpectedly, there will be a change in the structure of production. Increases in the relative proportion of labor-intensive product demand occur and hence decrease investment need relative to domestic saving, and encourage the current account surplus. This paper tries to fill the empirical studies gap on the effects of the labor force, especially its utilization in the data panel of ASEAN + 6 countries using the generalized method of moments (GMM) used to capture the unobserved heterogeneity and endogeneity across countries that often arise in a panel data model. The estimation result shows that the labor force is an asymmetric shock; only affect the country of origin without affecting other members in the group, although including financial institution deepening as a control variable. The analysis also indicates if the labor regulations in these countries tend to be rigid because of the speed of the current account adjustment is relatively slow.