Impact of low-skilled foreign workers on wages, tasks, and well-being of native workers in Japan
This paper examines how low-skilled foreign workers affect native workers’wages,job tasks, and subjective well-being in Japan. We exploit temporal and regional variationsgenerated by the 2019 Specified Skilled Worker program and the COVID-19 shock, which provide a quasi-natural experiment. Using individual-level panel data from the Japan Household Panel Survey (2019–2024) and a Bartik-type instrumental variable strategy, we find that average wage effects are close to zero. Modest positive impacts are observed around the middle of the wage distribution, most notably near the 40th percentile and the mid-60s percentiles, with small and imprecise effects at the tails. Subgroup analyses reveal similar patterns across employment, skill, and task profiles. Routine task content declines in the total sample and several subgroups, providing suggestive evidence of task reallocation. A nested CES framework with immigration- related improvements in native productivity interprets the wage and task patterns through production complementarity and task upgrading, which can offset wage pressure on native low-skilled workers. Work-related well-being shows minimal overall effects, while life satisfaction records a modest negative effect, with adverse outcomes concentrated among non-regular and low-wage workers and additional heterogeneity by task profiles and skills. Declining well-being among specific groups suggests non-pecuniary impacts, including perceived job insecurity, workplace adjustment costs, and local congestion/amenity pressures. Overall, we find no evidence of broad wage losses for native Japanese workers; the estimates instead suggest gains at some middle-wage quantiles and uneven non-pecuniary costs across worker groups. These findings are relevant to economies with persistent shortages of low-skilled labor.
