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

This article investigates the impact of low-skilled immigration on native workers' wages by analyzing South Korea's Employment Permit System (EPS), a temporary immigrant worker programme allowing low-skilled workers from 16 Asian countries to fill labor shortages in small and medium-sized firms. Using firm-level survey data from 772 manufacturing firms and exploiting exogenous variation in EPS worker quotas tied to firm size, the study finds that an increase in immigrant workers does not reduce native workers' wages, despite comparable educational attainment and overlapping production tasks. The findings suggest imperfect substitution and task specialization between native and immigrant workers within firms, which may mitigate wage competition. The study emphasizes that its firm-level results do not necessarily generalize to national-level wage effects and highlights the need to consider broader labor market responses to immigration.