How does low-skilled immigration affect native wages? Evidence from Employment Permit System in Korea

Abstract This study examines the effects of low-skilled immigration on the wages of native workers by analysing Korea’s temporary immigrant worker programme. Using firm-level survey data, we exploit exogenous variations in the number of foreign workers firms can hire to estimate the wage effects of immigration. We find that an increase in immigrant workers in a firm does not affect the firm-specific native wages, even though both native and immigrant workers mainly work in production jobs. Our results indicate that native and immigrant workers could possibly be imperfect substitutes even within narrowly defined occupations in a firm.