Intranational Skill-relevance Model of the Immigrant's Self-selection: Further Evidence of the Stylized Fact from the E-9 Employment Permit System (EPS)

Kwonhyung Lee, Yejin Lim and Sunghyun Cho

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Abstract: This study expands upon the foundation of 'Skill-Relevance-Self Selection' model on labor immigration, introduced by our previous study (Lee, Lim, & Cho, 2022). In detail, we seek an empirical confirmation of the model by providing evidence of the attained -- however, yet to be tested -- stylized fact: 'as the discount of intranational skill-relevance by immigration is intensified, the wage differential of international labor immigration is diminished'. Utilizing the hypothesis and data meticulously formulated and selected in consideration of Employment Permit System (EPS) and the typology of host nations, OLS linear regression results reasonably support all hypotheses with statistical significance, thereby inductively substantiating our constructed model. This paper contributes to existing labor immigration economics literature in three following aspects: (1) Acknowledge the previously overlooked factor of 'skill relevance discount' in labor immigration as an independent parameter, separate from the 'Moving cost' of Borjas model (1987; 1991); (2) Demonstrate the down-to-earth economic implications of host nation typology, thereby establishing a taxonomy in existence, rather than an ideal classification; (3) Seek a complementary synthesis of two grand strands of research methodology -- that is, deductive mathematical modeling and inductive statistical testing.

Date: 2023-06
New Economics Papers: this item is included in nep-mig
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