Labor market impact of COVID-19 on migrants in South Korea: Evidence from local outbreaks

Abstract

Despite the growing importance of migrants and their role in the South Korean economy, how much and in which ways COVID-19, as an adverse labor market shock, has affected them has received too little attention, with no single study published to date yet. Motivated by such a paucity, this paper investigates the impact of the COVID-19 pandemic crisis on employment for migrants in South Korea, with special emphasis on quantifying the magnitude of its causal effect. In doing so, this study exploits the unique fact that only one specific region in South Korea had a substantial number of COVID-19 infections in the early stage of the pandemic so that estimations can be made using a difference-in-differences (DD) model. The DD estimates suggest that COVID-19 lowered migrants’ overall employment probability by 2.5 to 3.2 percent points. However, strong heterogeneity between the genders is apparent: the pandemic severely hurts female migrants’ employment, with male migrants weathering it relatively unscathed. Furthermore, female migrants seem considerably harder hit than female host populations. Heterogeneity analyses reveal that (i) a duration of stay exceeding 5 years and (ii) fluency in Korean (as a local language) protect migrants from being heavily affected by the COVID-driven employment shock.