Migrant Labor and Regional Economic Performance: Spatial Associations by Skill Level and Industrial Structure

Abstract This study investigates how skill-specific migrant labor is associated with regional economic performance, with a focus on industrial structure and spatial interdependence. Using a balanced panel of 16 metropolitan cities and provinces in Korea over the period 2012–2023, we estimate spatial panel models and adopt the Spatial Durbin Model as the main specification because the diagnostics indicate spatial dependence and the research question requires decomposition into direct, indirect, and total effects. The results indicate that a higher share of low-skilled migrant labor is positively associated with regional GRDP per capita, both within regions and through indirect spatial associations across neighboring regions. In contrast, the association for high-skilled migrant labor is more contingent on regional production structures. Although the baseline estimates suggest a negative average association, this relationship varies systematically by industrial composition. The association becomes more favorable in manufacturing-oriented regions, although this manufacturing-related pattern is less robust to the inclusion of additional native labor-market controls. In service-oriented regions, the within-region association is less favorable, but positive indirect associations make the overall spatial-system association more favorable. Taken together, the findings show that the economic role of migrant labor is shaped by both industrial heterogeneity and spatial interconnectedness. These findings imply that migrant labor policy should be spatially and industrially differentiated, with attention to skill-specific matching and cross-regional indirect spatial associations rather than uniform national allocation.