The Impact of Introducing International Unskilled Labor on the Labor Market of Developed Countries: Illustrated by the Relationships of Implementation of OECD Countries’ Low Skilled Working Permit Policies and the Countries’ Unemployment Rate

Abstract

This study focuses on the relationship between the OECD countries’ labor markets’ performance and the Working Holiday Visa policy, which provides young people with a temporary work permit. The program has been adopted by many developed countries, as it can address seasonal worker shortages at a low cost. However, only a few studies have examined its impact on the host countries’ labor market. Based on this paper’s regression results, the policy has negative robust significant correlations with the unemployment rate for OECD countries. It shows us the positive result of this policy for the developed world and the attraction of international unskilled labor may partially solve problems of population aging and declining fertility. Nevertheless, potential misspecification issues (e.g. omitted variable) remain in this paper’s models. Further study in this domain is also needed.