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KMID : 1124020180340040033
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Korean Social Security Studies
2018 Volume.34 No. 4 p.33 ~ p.60
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Employment Effect of Employment Permit System in Korea
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Kim Jung-Ho
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Abstract
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The policy on foreign workers in Korea has been mainly focused on the unskilled labor, and its main body is Employment Permit System(EPS) introduced in 2004. The paper estimates the impact of the inflow of foreign workers under EPS on the employment of natives for ten years after its introduction. Using monthly industry-level panel data based on EPS and Employment Insurance microdata, it is found that the influx of foreign workers had an insignificant effect on the natives’ employment on average, but that its effect varies depending on industry and characteristics of natives. Specifically, the employment of men in their 10s and 60s or older and that of women in their 20s and 30s is estimated to have declined. In addition, in the manufacturing industry and agriculture and forestry fisheries, the relationship between foreign and native workers was complementary before 2011, but it has weakened since then. In the service sector, the substitution between foreign and native workers was detected for a period between 2007 and 2011, and it has been observed to be further strengthened since 2012. While the absolute magnitude of the employment effect of the foreign workers at industry level is not significant, the fact that there is a significant adjustment for different groups and sectors suggests that public support is needed to minimize the cost associated with the adjustment process.
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KEYWORD
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employment permit system, foreign workers, native employment, employment insurance
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