Labor Segmentation and the Outmigration Intention of Highly Skilled Foreign Workers: Evidence from Asian-born foreign workers in Japan

         
Author Name LIU Yang (Fellow, RIETI)
Creation Date/NO. May 2018 18-E-028
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Abstract

This study examines the determinants of the outmigration intentions of highly skilled foreign workers, i.e., workers who received post-secondary education, following conventional migration theories. Data come from a survey of firms and their foreign employees in Japan; most of whom were born in Asia, especially in China (77.4% of total observations). The results found that education level and average wage gaps did not significantly affect the outmigration decisions of Asian-born workers. However, the labor segmentation variable, which represents the firm's differentiation between foreign and native workers, has a significant estimated effect. Results indicate that Asian-born employees of firms that differentiate between foreigners and native workers are more likely to migrate away from Japan. The explanation could be that labor segmentation reduces foreign workers' expected future wage. Furthermore, the lifetime employment system in Japan could reduce the outmigration of Asian-born foreign workers, because the reduced future unemployment risk increases workers' expected wage from working in Japan. Moreover, a higher current job satisfaction could have a negative effect on Asian-born foreign workers' outmigration intention. Finally, among the control variables for the original migration motivations, Asian-born foreign workers who were motivated by the Japanese lifestyle tend to remain in Japan, while Asian-born foreign workers who were motived by wages are more likely to migrate away in the future.