Task specialization and low‐skilled immigration in a highly educated country: Evidence from Korea

Abstract

While imperfect substitutability between native and immigrant workers is an important mechanism in estimating the wage effects of immigration, its empirical literature is concentrated on the context of only a few countries. Using occupation task‐intensity data from a unique Korean data set, we demonstrate that relatively skilled native Korean workers respond to increased low‐skilled immigration by pursuing jobs more intensive in communication and cognitive tasks. This native response is mainly pronounced in knowledge‐intensive service sectors and leads to an improvement in average wages in these sectors. Our results support the general assumption that the labor market impact of immigration critically depends on whether native and immigrant workers are substitutes or complements in production.