Migration and Labor Markets: The Cases of Europe and Japan (Summary)

Opening Remarks

FUKAO Kyoji (Chairman, RIETI / University Professor, IER, Hitotsubashi University)

Foreign workers are an important part of society in that they bolster the labor market in developed countries, which face declining birthrates and aging populations. In addition to the short-term challenge of responding to labor shortages, how the integration of foreign workers into the domestic labor force affects the employment structure, wages, and overall labor market dynamics as well as how to beneficially integrate migrant workers have become important research and policy issues shared across various countries. This symposium shares current research findings from Europe and Japan while discussing the influences of migration on the labor market and suggestions for future institutional design and policy response from the perspective of economic analysis. I hope today’s discussions will help provide valuable academic and policy insights for considering how we should address migration and labor markets.

Session 1: Whose American Dream? Intergenerational Mobility of Immigrants and Natives’ Policy Preferences

Session Chair and Discussant: OKUBO Toshihiro (Faculty Fellow, RIETI / Professor, Keio University)

Presentation:

Hillel RAPOPORT (Co-director, CEPR Research and Policy Network (RPN) on Migration / Professor at Paris School of Economics (PSE))

The topic of this symposium is migration, and what I want to discuss is perceptions of migration and how they can affect public opinion and policy. This research, conducted with Matteo Ferroni and Javier Soria, examines whether informing people about the intergenerational mobility of immigrants changes policy preferences.

When immigrants describe the American Dream, they often focus on creating better opportunities for their children. However, natives tend to think about first-generation immigrants rather than the second generation, whose story is often one of success and integration. We argue that focusing only on the first generation misses an important dimension of immigration.

Public perceptions of immigration are often inaccurate. People tend to overestimate both the number of immigrants and percentages of certain immigrant groups within those numbers. A similar misperception exists regarding economic mobility. In reality, second-generation immigrants in the United States generally experience greater upward mobility than native-born children from comparable low-income backgrounds. While native children born at the 25th percentile typically reach the 41st percentile of the income distribution, children of immigrants often do better, regardless of country of origin.

Yet only 15% of respondents in our survey correctly believe that immigrant children have higher upward mobility. We therefore test whether providing information about this reality changes attitudes toward immigration, redistribution, and inclusion.

People may interpret immigrant success in two ways. Those with a positive-sum mindset may see it as evidence that immigration contributes to society. Those with a zero-sum mindset may see it as increased competition. Which reaction dominates is an empirical question.

Using a nationally representative survey of 4,000 Americans, we find that providing information about immigrant mobility increases the share of respondents that hold accurate beliefs from 15% to 57%. This correction in perceptions leads to more pro-immigration and inclusive policy preferences. The effects vary depending on individuals’ mindsets and the local immigration conditions where they live.

Comment

OKUBO:
This paper makes an important contribution by shifting attention from the static outcomes of first-generation immigrants to the intergenerational mobility of the second generation and how people respond to information about immigrant success over time.

The central finding is that information about immigrant mobility increases support for immigration and immigration-targeted policies, but has little effect on general redistribution preferences. This suggests a distinction between the overall size of redistribution and the allocation of redistribution across groups. People do not change how much redistribution they support overall, but they do change who they believe should benefit from it.

One possible mechanism is deservingness. Information about the success of immigrant children may lead people to view immigrants as hard-working and integrated into society, making them appear more deserving of support. However, this does not make people broadly more egalitarian; rather, it changes perceptions about which groups deserve assistance.

One methodological concern is that the IV (instrumental variable) estimates should be interpreted as Local Average Treatment Effects (LATE), capturing only those who process and understand the information. In real-world settings, many people may ignore or misunderstand such information, potentially limiting external validity and making the estimated effects larger than what would occur in practice.

Finally, the interpretation of immigrant success may differ across countries. In the United States it aligns with the American Dream and meritocracy, whereas in more homogeneous societies such as Japan it may raise concerns about competition and social cohesion. The paper therefore highlights how information can reshape perceptions of deservingness without necessarily changing broader attitudes toward redistribution.

RAPOPORT:
Thank you for the comment. While the interpretation that the paper is about greater inclusiveness rather than greater support for redistribution is important, I see the main contribution as showing how people respond differently depending on whether they view immigration from a mindset of contribution or competition. The comment helps clarify how we should frame that contribution.

On the econometric point, the survey excludes respondents who fail attention checks or clearly do not engage with the questions, which is standard practice. It is possible that real-world effects are smaller because many people do not pay attention to information about immigration, although inattentiveness in surveys does not necessarily imply indifference to real social issues.

The point about context is particularly important. In the U.S., information about upward mobility aligns with ideas of meritocracy and the American Dream. In a more homogeneous society like Japan, the same information may generate very different reactions. This is something we would like to study further.

Q&A

Q:
What does China’s mobility score mean?

RAPOPORT:
Children from poor Chinese immigrant households rise on average from the 25th to the 71st income percentile, representing exceptionally high upward mobility.

Q:
Can these findings be applied to guest-worker systems?

RAPOPORT:
That is more difficult because guest-worker systems often lack a permanent second generation, making the mechanism studied here less directly applicable.

Session 2: The Gender Dimension of Refugee Integration in the Labor Market: Evidence from Switzerland

Session Chair: HASHIMOTO Yuki (Senior Fellow (Policy Economist), RIETI)

Presentation:

Martina VIARENGO (Professor, Department of Economics Geneva Graduate Institute / CEPR Fellow)

This study examines gender gaps in the economic integration of refugees in Switzerland, and is motivated by the growing scale, duration, and changing composition of global forced displacement. Refugee integration is increasingly important as displacement becomes more long-term and urban, yet evidence on gender differences remains limited.

Switzerland provides a suitable setting because asylum seekers are quasi-randomly assigned across Swiss cantons through a spatial dispersal policy, allowing us to identify the effects of local conditions. We use a unique longitudinal dataset covering the entire refugee population in Switzerland over 20 years.

We focus on two broad influences on labor market integration: country-of-origin culture and local conditions at arrival. Cultural factors include gender norms around labor force participation and fertility. Local factors include unemployment, co-national networks, and native attitudes toward gender equality, measured using voting outcomes rather than survey responses.

Employment rates are low for both male and female refugees upon arrival, but women start lower, integrate more slowly, and continue to experience significant employment gaps even after 20 years. Higher female labor force participation in the country of origin is associated with a smaller gender employment gap, while higher fertility norms are associated with a larger gap. These effects are specific to women and persist over time.

Local conditions also matter. More gender-equal native attitudes reduce the gender employment gap. Co-national networks help both genders, but the underlying mechanisms differ. A consistent explanation could be that non-working co-nationals support women’s labor market participation through childcare, while working co-nationals help men access job opportunities. Higher local unemployment disproportionately and negatively affects women.

The findings suggest that refugee integration policies should pay greater attention to gender, as gender-neutral policies may not be sufficient to address these gaps. Targeted measures such as childcare support and placement policies that consider local conditions may improve long-term integration.

Comment

LIU Yang (Senior Fellow and Policy Advisor, RIETI)

This paper makes important contributions through its rich 20-year dataset and its analysis of both source-country culture and local conditions in shaping refugee women’s labor market outcomes in Switzerland.

For the purpose of this conference, I compare the Swiss case with Japan. Evidence reveals several parallels. First, In Switzerland, origin-country gender norms, reflected in female labor force participation (LFP) and fertility, shape women’s employment outcomes after migration. Studies in Japan likewise show that source-country female labor participation influences married immigrant women’s participation, indicating that gender norms persist across migration contexts. This implies that integration policies should account for cultural backgrounds. Second, I compare the effects of host-country institutions between the two countries. In Switzerland, local employment conditions and native gender attitudes influence gender employment gaps, while Japanese research finds labor market institutions, hiring practices, and local economic conditions influence immigrant outcomes. These findings imply that institutional reforms could enhance integration.

For future research, I think that examining underlying mechanisms is crucial. The effects on refugees’ employment may operate through changes in labor force participation, reflecting gender norms, or through unemployment dynamics linked to human capital and labor market adjustment. Fertility outcomes may also depend on not only origin-country norms but also host-country childcare and family policies, so the diminishing effect of origin-country fertility on labor-market outcomes may be partly explained by refugees’ increased access to market childcare and family-support institutions, rather than by cultural reasons alone.

The Swiss findings also raise important questions for Japan. If cultural effects persist over the long term, as they do in Switzerland, female immigrants from countries with high female LFP may continue contributing to Japan’s labor market despite lower gender equality in Japan; in fact, some studies suggest that female LFP does not decrease even after a considerable period of residence in Japan.

More broadly, understanding whether successful immigrant integration benefits native populations remains an important topic for future research and policy discussion.

VIARENGO:
Thank you for the comments and comparison with Japan. The findings support the idea that country-of-origin norms persist across very different institutional settings. This is consistent with the epidemiological approach, where values, preferences, and beliefs acquired before migration continue to influence labor market behavior, particularly through vertical channels of transmission. We also examine a range of labor market outcomes beyond employment, including labor force participation, and earnings. In addition, we control for changes in refugee characteristics over time, including permit status, allowing us to capture different dimensions of labor market participation.

Q&A

Q:
Does the low employment rate among some refugee groups mean that those refugees simply choose not to work because of cultural beliefs, meaning that the traditional categorization of unemployed people who are searching for employment does not apply to them?

VIARENGO:
We cannot draw conclusions on this as we observe actual labor market behavior. We can identify whether individuals participate in the labor force, whether they are actively seeking employment, and whether they are outside the labor force, allowing us to examine these different dimensions separately.

Session 3: Foreign-Native Wage Gap in Japan: Segregation by Visa Policy

Session Chair: OKUBO Toshihiro (Faculty Fellow, RIETI / Professor, Keio University)

Presentation

HASHIMOTO Yuki (Senior Fellow (Policy Economist), RIETI)

The number of foreign workers in Japan has increased significantly from about 0.5 million in 2008 to about 2.57 million in 2025. Especially the number of specified skilled workers (SSWs) has increased some fortyfold from 2020 to 2025.

Most of the firms employing SSWs and technical intern trainees (TITs) are SMEs, and among the major issues raised in surveys are low wages and other labor management issues. Our research shows that the wage gap between Japanese and foreign workers can be largely explained by human capital attributes, such as age and educational background, and firms’ human resource management (HRM) practices. The wage gap between Japanese and foreign workers within the same firm is approximately 6.2%, which is not particularly high compared with Western countries. Educational background and wage distribution vary by visa group. It is true that SSW and TIT status holders are relatively concentrated in industries which feature low-wage employment.

Research using datasets from the Financial Statements Statistics of Corporations by Industry shows that employing SSWs and TITs does not necessarily improve productivity but contributes to alleviating labor shortages and maintaining production levels. However, many TITs are moving from rural areas to urban centers after obtaining SSW status, making talent shortages a serious problem in these non-metropolitan regions. Their subsequent mobility also raises the issue of how firms can recover the costs of training TITs. This issue will remain under the new Employment for Skill Development program, which is scheduled to be introduced next year..

A survey targeting SSWs and TITs has confirmed that their satisfaction is associated with interest in their roles and the opportunities that are provided to demonstrate their abilities, meaning that they tend to prioritize not only pay but also working environments and career prospects. However, they still have limited promotion opportunities, and this is also the common challenge faced by non-regular workers in Japan. Going forward, rigorous analysis to better understand the realities facing foreign workers and evidence-based policymaking are both important.

Comment

KONDO Keisuke (Senior Fellow, RIETI / Associate Professor, Research Institute for Economics and Business Administration (RIEB), Kobe University)

Before offering my comments, let me briefly summarize Senior Fellow Hashimoto’s presentation. Using recent microdata from the Basic Survey on Wage Structure and new METI survey questions, the study examines wage differences between Japanese and foreign workers. The key finding is that while an aggregate wage gap exists, it disappears once worker and workplace characteristics are controlled for. In other words, the observed wage gap is fully explained by observable factors. The study also shows that Japan’s demand-driven immigration policy shapes wage distributions through its influence on migrants’ occupations and educational profiles. In addition, foreign workers increasingly value job content and career prospects, highlighting the importance of firms’ responses to changing preferences.

My first comment concerns whether foreign workers receive the same returns on education and tenure as Japanese workers. From a technical econometric perspective, the current approach imposes the assumption that the coefficients on the explanatory variables are the same across Japanese and foreign workers, thereby focusing on differences in the constant term. However, differences in coefficient estimates may also matter. A Blinder-Oaxaca decomposition could help examine this issue, which is particularly important for understanding the long-term economic integration of foreign workers.

My second comment concerns gender. The gender wage gap among foreign workers deserves greater attention. Preliminary evidence for foreigners categorized by their status of residence suggests that there is little visible gender gap in monthly wages among professional/specialist and technical intern workers. In contrast, noticeable gaps are observed among foreign workers with social-position status (permanent residents/ spouses etc.) and, to a lesser extent, among specified skilled workers. Particularly, foreign workers with social-position status have employment conditions which are more similar to Japanese nationals. Why do these gender differences in monthly wages emerge within certain residence categories? Understanding these mechanisms is an important topic for future research and evidence-based policy making.

HASHIMOTO:
Our research project has already embarked on the analysis of female workers and found that gender wage gaps vary by residence status. But the reason for the occurrence of different mechanisms among different visa groups is still unknown—a research topic to be studied in the future.

Q&A

Q:
Is the SMEs’ limited capacity to raise wages better explained by overall lower sales and margins compared to major corporations, rather than their higher labor share?

HASHIMOTO:
This research also shows that SMEs generate lower sales and per-capita added value; however these results do not contradict the data showing higher labor shares. I think both are consistent with each other.

Session 4: Panel Discussion

Session Chair: TAMURA Akihiko (Senior Advisor, RIETI / Director General, JETRO Paris)

Panelists (Alphabetical order):
KAMBAYASHI Ryo (Professor, Department of Economics, Faculty of Economics, Musashi University)
OKUBO Toshihiro (Faculty Fellow, RIETI / Professor, Keio University) Hillel RAPOPORT (Co-director, CEPR Research and Policy Network (RPN) on Migration / Professor at Paris School of Economics (PSE))
Martina VIARENGO (Professor, Department of Economics Geneva Graduate Institute / CEPR Fellow)

TAMURA:
Based on the insights given in the previous three sessions, this session aims to help discuss Japan’s policy for accepting foreign workers. Since the late 1980s, the numbers of foreign residents and foreign workers in Japan have shown an upward trend, reaching 4.13 million (3.35% of the total population) and 2.57 million respectively as of year 2025. In alignment with this trend, the residence status system for foreign workers has been updated. In recent years, under the government policy of actively accepting highly skilled talent, various residence qualifications have been created or reorganized, including Highly Skilled Professional and Engineer/Specialist in Humanities/International Services. Foreign workers comprise diverse residence statuses such as residents with an aim to work, TITs, and international students employed as part-time workers. Many of them are from Vietnam, China, and the Philippines and work in the manufacturing and service industries. Also, they tend to be employed by small-scale business establishments. The Japanese government is promoting the acceptance of highly skilled talent while emphasizing the need to carefully consider the acceptance of other personnel based on economic benefits and social costs among others.

Presentation

KAMBAYASHI:
In Japan, the working-age population continues to decline, while its employment rate has risen rapidly, reaching 80% in 2024 - close to its practical ceiling. Against this rising demand for labor, the role of foreign workers has grown rapidly: after COVID-19, the increase in the number of foreign workers was almost exactly equal to the number of additional workers needed to keep total employment from falling.

A rise in the employment rate among prime working age individuals was largely attributed to female labor participation in the form of part-time workers. A shift from part-time to full-time work is necessary to increase labor supply in terms of working hours. To that end, corporate management transformation is indispensable, including not only support for balancing work with housework and childcare, but also task design, the allocation of promotion and training opportunities, and a review of evaluation systems. In Japan, however, there is a strong tendency to assume that the problem can be solved by changing women's own attitudes, and organizational reform has not progressed far. As a result, I believe the decrease in working population is just offset by increasing the number of foreign workers.

Japan's policy toward foreign nationals has been pursued along two separate tracks: employment policy, which incorporates foreign workers into Japanese employment practices through incentives for employers, and multicultural coexistence policy, which pursues social inclusion mainly through local governments. As you know, in Europe and the United States, leaving the inclusion of foreign nationals to social policy alone has already produced a range of problems. What is required is to design a system that balances employer responsibility against social inclusion, but that will not be easy to achieve.

OKUBO:
I think what is important in discussions on foreign workers is not only economic data and theory, but also public perception. My presentation today is based on the results of the survey I conducted with the Nippon Institute for Research Advancement (NIRA) targeting 8,100 Japanese workers. Its key questions include “Are you working with foreigners in your workplace?,”“Is it difficult to live with foreigners?,”“Are they essential in the workplace?,”“Do you support immigration policy?” and “Should we restrict foreign workers?”

Analysis shows that the more exposure they have to working with foreigners, the more likely they are to think that foreign workers are essential and contributors to the Japanese economy. On the other hand, no correlation was found in terms of empathy with foreigners in daily life. There is also a strong occupational divide: Those engaging in agriculture, forestry, fishery, transport, and food service show less support for immigration policy while business managers and professional workers are relatively positive. As for the expectation that digitalization will help solve labor shortages, almost no correlation was found with exposure to foreigners. In summary, exposure to foreigners has some positive impact on the acceptance of foreign workers, but the impact levels vary strongly by occupation.

RAPOPORT:
Europe and Japan have very different migration histories, but there is much they can learn from each other. One key lesson from decades of research is that immigration has only small average effects on native wages and employment. Immigrants often complement native workers, increase diversity, boost innovation, productivity, and integration into the global economy.

For Japan, the major challenge is attracting a more diverse and skilled workforce. This requires more than temporary labor migration. Skilled migrants have choices and are more likely to settle in societies that offer long-term integration, openness, and diversity. It is difficult to attract highly skilled workers while maintaining restrictive attitudes toward immigration. Immigration policy must recognize that migrants are not only workers but future members of society. Research also suggests societies with stronger anti-immigration sentiment tend to attract fewer skilled migrants, while less-skilled immigration can further strengthen populist attitudes.

Cultural attitudes can change dramatically over time, as shown by the transformation of views on interracial marriage in the United States. Ultimately, societies change when they recognize that openness is not simply a moral issue but an economic asset. History shows that closed societies risk missing opportunities for growth, innovation, and long-term prosperity.

VIARENGO:
Thank you for the opportunity to summarize the earlier session. The study I presented examined refugee labor market integration in Switzerland using administrative, social security, and employment data covering the entire refugee population from 1998 to 2018. Switzerland’s quasi-random spatial dispersal policy allows causal identification of the effects of local conditions on employment and earnings.

We find that women from countries with higher female labor force participation integrate faster, and this effect strengthens over time. Higher fertility in the country of origin is associated with lower integration for women, although this effect fades after about a decade. These cultural factors do not significantly affect men’s outcomes. Local conditions also matter: Higher unemployment disproportionately affects women, co-national networks affect men and women differently, and more gender-equal attitudes in the assigned canton reduce the gender employment gap.

The evidence identifies the conditions that shape the pace and extent of labor market integration. The comparison with Japan suggests that gender gaps emerge across very different contexts, underscoring the importance of measuring the gender dimension of integration. These findings open several avenues for future research, including the mechanisms through which cultural norms operate and the underlying channels of persistence and change, which I am currently exploring in ongoing research.

Discussion

RAPOPORT:
I have two comments. First, is immigration’s impact on wages purely compositional, or does it change native workers’ wages? The distinction is important. Second, the absence of a wage gap does not necessarily imply the absence of discrimination, since labor market segmentation and restricted mobility can themselves be forms of discrimination.

VIARENGO:
I have two questions for our colleagues. For Dr. Kambayashi how do career trajectories and earnings growth vary by migration status and education among foreign workers, and what are the implications for integration policy? For Dr. Okubo, does the labor force survey cover international students, and what patterns do you observe in students remaining in Japan after graduation and integrating into the labor market?

KAMBAYASHI:
For TITs and SSWs, the key question is whether firms can develop them as core workers and connect this to long-term employment and promotion to managerial positions; this amounts to incorporating foreign workers into the core of Japanese employment practices. That means a policy of developing foreign workers as part of the core labor force has a natural affinity with Japanese employment practices, and is therefore completely inconsistent with the government's current labor market policy, which is pushing to revise those very practices.

OKUBO:
My data is only for Japanese workers. So, no students, but the student workers are included, however that does not include foreigners.

Q:
Who gains from Japan’s recent stricter policy on accepting foreign workers, such as stricter requirements for Business Manager visas and Engineer/Specialist in Humanities/International Services visas, and cooperation in maintaining social order? In Europe, have such stricter requirements been introduced or not?

KAMBAYASHI:
Of course, once a policy is proposed, the proposer has some policy objective, or an intention to advance their own interests. In ordinary employment policy, however, policy is not determined by the proposer's objectives alone. In Japan, under the institutional principle of labor-management autonomy, policy is formed through coordination among the interested parties, employers and workers, and takes account of the impact on each of them. In policy on accepting foreign workers, by contrast, one of the parties concerned, the foreign workers themselves, cannot participate sufficiently in the policy-making process, and the mechanism for reconciling interests cannot be said to be functioning adequately. As a result, even if we can understand the objectives of those proposing a policy, it is not easy to evaluate what benefits and disadvantages the policy has been designed on the assumption of delivering to employers, foreign workers, Japanese workers and others. In addition, as I noted earlier, in Japan the visa system tends to be decided as part of employment policy, and multicultural coexistence policy, including the education of foreign workers' children, as part of social policy, each independently of the other. Consequently, even if we interpret the tightening of the visa system as intended to realize gains in social policy, there is no adequately developed framework for comprehensively assessing that policy's effects on employment, including its relationship to other policies. So, in response to the question "who benefits?," while we may take as given that the proposers have certain policy objectives, there is no sufficient institutional framework in which those objectives are reconciled with stakeholders' interests and organized into the overall benefit of the policy; it is therefore difficult to identify any particular actor normatively as the beneficiary of those objectives. Whether any particular actor is in fact gaining could be verified empirically if sufficient data were available; but, as this symposium has made clear, such data do not sufficiently exist at present, and so it is also difficult to point empirically to any particular actor as the beneficiary.

VIARENGO:
Based on the existing evidence, in general, access to legal status and labor markets is crucial for refugee integration, while language training consistently improves employment and social cohesion. Evidence on active labor market policies is mixed, though job-search assistance and vocational training show some promise. Policy effectiveness depends on cost-effectiveness, scalability, context and institutions rather than individual interventions alone.

Closing Remarks

Beatrice WEDER DI MAURO (President, CEPR / Professor, The Graduate Institute, Geneva)

This was the 21st symposium of RIETI and CEPR and it showed, again, that jointly we are able to address important issues with research-based evidence. The research highlighted how migration has become a central policy issue amid ageing populations and growing political backlash. Despite evidence that immigration has only limited effects on native wages and employment, many countries are debating tighter restrictions. Discussion emphasized that attitudes toward migration are shaped by perceptions and mindsets, particularly whether people view migration as zero-sum or as creating mutual benefits. These attitudes can change over time, just as national identities and social norms have evolved.

Several international experiences offer lessons. Brexit did not reduce immigration overall; it shifted migration flows toward non-European countries. Switzerland’s former guest-worker system illustrated that temporary migration without integration can create social separation and weak integration outcomes. By contrast, refugee integration, while difficult and slow, demonstrates that meaningful labor market integration is achievable over time.

Looking ahead, population decline across Europe and Asia will increase demand for foreign workers, while Africa’s population will continue to grow rapidly. The challenge for policymakers will be to strike the right balance between openness, integration, and long-term demographic sustainability. This symposium reinforced the value of evidence-based research in informing these debates and guiding future policy choices.