Impacts of international migration on the labor market in Japan

This paper introduces an empirical analysis on three key points: (i) whether the introduction of foreign workers into the labor market will serve to lower wages for Japanese workers, (ii) whether the introduction of foreign workers will affect the supply behavior of Japanese workers in a region, and (iii) whether the introduction of foreign workers will affect companies’ technology choices. Since statistical data about foreign workers are limited in Japan, it is difficult to make a strict analysis on the relationship between Japanese and foreign workers. This paper analyzes this relationship, focusing on the above three key points and matching individual data by using existing statistical data including the Population Census, the Establishment and Enterprise Census, the Basic Survey on Wage Structure, and the Employment Status Survey. Analytical findings indicate that the introduction of foreign workers has positive effects on wages for domestic workers in Japan—as seen in other countries that accept foreign workers—and that the inflow of foreign workers into a region could cause an outflow of Japanese workers from that region through its effect on the labor supply behavior of Japanese workers.