Low-skilled immigration and automation: evidence from South Korea

This paper examines how the supply of low-skilled immigrant labour influences firms’ adoption of automation technologies, using workplace panel data from South Korea. To address endogeneity, I exploit regional variation in the share of overseas Koreans in the population as an instrument. The results suggest that immigration and automation operate as substitutes: when immigrant labour is more readily available, firms are less likely to adopt new automation, whereas labour scarcity encourages adoption. The effects are pronounced among establishments with higher initial levels of automation, those engaged in repetitive tasks, and those employing a high share of permanent workers – consistent with limited flexibility in labour adjustment.