The Immigrant Wage Gap and Assimilation in Korea

Abstract

This study investigates the size of the initial wage disadvantage and the patterns of subsequent labor-market assimilation for immigrant workers in South Korea. We find that immigrants to Korea earn 17-29% less upon arrival than natives with similar characteristics, and the wage gap diminishes by 1.55%p per year spent in the country. The patterns of assimilation differ by both gender and country of origin. Males and Asian immigrants generally follow the patterns for all foreign workers. However, females experience a smaller initial wage difference and no convergence, while immigrants from non-Asian countries and Japan initially earn higher wages than natives, but they then experience a relative decline in wages over time. The results of our out-migration analysis suggest that the negative assimilation of non-Asian and Japanese immigrants may be due to positively selected out-migration. Specifically, the out-migration hazard increases by 6.7% with a 10% increase in wages.

Keywords: Immigrant workers, Wage differential, Assimilation, Out-migration

JEL Classification: J15, J31, J61