Wage and Employment Effects of Immigration: Evidence from Korea

Abstract

This paper studies the impact of immigration on native labor market outcomes in Korea. We exploit the variation in immigration flows in an education-experience cell and find that, on average, immigration has no harmful effect on the wages or employment of native workers. However, there is great heterogeneity in the wage effects across education groups: high school dropouts suffer from the adverse effects, whereas the effects for college graduates are positive. We find the potential explanation for these differential effects in the suggestive evidence on the degree of substitution. Specifically, we examine the similarity of occupational distribution between natives and immigrants. While the least-educated natives and immigrants have almost identical occupation distributions, highly educated natives are likely to work in different occupational segments from the corresponding immigrants.