Event Date
Speaker: Jongkwan Lee
Affiliation: Yonsei University
Abstract :
Can allowing foreign guest workers to stay semi-permanently in the host country help relieve labor shortages? This study examines the impacts of enabling a stable stay for foreign guest workers on local job vacancies and labor productivity. We exploit the introduction of the E-7-4 visa system in South Korea, which allows temporary immigrant workers to transition to a stable residency status. Applying an event study that leverages the pre-period exposure to the new visa system across districts, we first find that the policy alleviates labor shortages in agriculture and low-skilled manufacturing, which suffer from significant labor shortages. We also find that allowing extended stays for guest workers can enhance the productivity of workers, possibly by facilitating skill upgrading and preventing the loss of firm-specific human capital. Finally, our heterogeneity analysis suggests that encouraging the continuous stay of foreign guest workers can effectively relieve labor shortages, particularly in regions where population decline is severe.