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The effect of low-skilled immigration on local productivity and amenities: Learning from the South Korean experience

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  • Kim, Hyejin
  • Lee, Jongkwan
  • Peri, Giovanni

Abstract

In this study, we evaluate the economic effects of a significant increase in low-skilled immigration in Korean Municipalities. Using a change in immigration policy in 2004 and the pre-existing immigrant networks we estimate the effects of low-skilled immigration on local wages, net native migration, and housing prices. We interpret the findings using a canonical representative agent spatial equilibrium model as in Glaeser and Gottlieb (2009) to infer the equilibrium effects of immigration on local productivity and amenities. An increase of immigrants equal to 1 percent of the local population generated a 1% increase in local productivity and a 1.6% decrease in local amenities. We also find a net migration response of zero among natives deriving from an inflow of those who moved for work-related and an outflow of those who moved for amenity-related reasons. Finally, we find a direct negative effect of the immigration shock on measures of local amenities.

Suggested Citation

  • Kim, Hyejin & Lee, Jongkwan & Peri, Giovanni, 2025. "The effect of low-skilled immigration on local productivity and amenities: Learning from the South Korean experience," Journal of Urban Economics, Elsevier, vol. 146(C).
    • Handle: RePEc:eee:juecon:v:146:y:2025:i:c:s0094119025000038
    DOI: 10.1016/j.jue.2025.103738
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    More about this item

    Keywords

    Immigration; Productivity; Local amenities; South Korea;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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