How the reduction of Temporary Foreign Workers led to a rise in vacancy rates in South Korea

Jeong, Deokjae (2022): How the reduction of Temporary Foreign Workers led to a rise in vacancy rates in South Korea.

Abstract

This paper investigates the causal impact of reducing low-skilled temporary foreign workers (TFWs) on job vacancies in South Korean manufacturing sectors, using the COVID-19 quarantine policy as a natural experiment. The research applies Difference-in-Differences analysis with a shift-share instrument based on the quarantine ‘shock’ and the ‘share’ of TFWs before the pandemic. The findings indicate that sectors heavily dependent on TFWs, especially for full-time positions, experienced higher vacancies for two years following the pandemic. Native workers were unable to fill the gap left by TFWs. Local Projection methods also confirm these findings

• Item Type: MPRA Paper
• Language: English
• Keywords: labor shortage, vacancy rate, immigration, temporary foreign workers
• Subjects: J - Labor and Demographic Economics > J1 - Demographic Economics > J18 - Public Policy; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J22 - Time Allocation and Labor Supply; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J61 - Geographic Labor Mobility ; Immigrant Workers; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J63 - Turnover ; Vacancies ; Layoffs

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