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Are Foreign Workers Responsible For The Increasing Unemployment Rate In Taiwan?

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  • Hsiao-chuan Chang
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    Abstract

    This paper investigates the current important issue in Taiwan that the impact of foreign workers on the rising unemployment by a dynamic intertemporal general equilibrium model. The results show that the introduction of foreign workers plays a complementary role and reduces unemployment rate at the early stage, defined as the first period after the shock. However, over time, the importation of foreign workers robs jobs from local unskilled labor and lifts the unemployment rate. In contrast to existing literature, this paper supports the view that immigration increases the unemployment rate for nationals in the long run. An appropriate policy regarding foreign workers for a small open economy like Taiwan needs to consider the state of the global economy. By considering the current ambiguity of world economic recovery and the high unemployment rate, a cautious policy for the Council of Labor Affairs to adopt is to maintain the current level of imported foreign workers.

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    Bibliographic Info

    Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 853.

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    Length: 25 pages
    Date of creation: 2002
    Date of revision:
    Handle: RePEc:mlb:wpaper:853

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    1. Chang, Hsaio-chuan, 1999. "Wage Differential, Trade, Productivity Growth and Education," Departmental Working Papers 2000-01, The Australian National University, Arndt-Corden Department of Economics.
    2. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc.
    3. Rachel M. Friedberg & J. Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Working Papers 95-5, Brown University, Department of Economics.
    4. McKibbin, W.J. & Wilcoxen, P.J., 1995. "The Theoretical and Empirical Structure of the G-Cubed Model," Papers 118, Brookings Institution - Working Papers.
    5. Addison, Thomas & Worswick, Christopher, 2002. "The Impact of Immigration on the Earnings of Natives: Evidence from Australian Micro Data," The Economic Record, The Economic Society of Australia, vol. 78(240), pages 68-78, March.
    6. Kristin Butcher & David Card, 1991. "Immigration and Wages: Evidence From the 1980's," Working Papers 661, Princeton University, Department of Economics, Industrial Relations Section..
    7. Robert J. LaLonde & Robert H. Topel, 1991. "Labor Market Adjustments to Increased Immigration," NBER Chapters, in: Immigration, Trade and the Labor Market, pages 167-199 National Bureau of Economic Research, Inc.
    8. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    9. Lee, Hahn Shik, 1992. "Maximum likelihood inference on cointegration and seasonal cointegration," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 1-47.
    10. Pope, David & Withers, Glenn, 1993. "Do Migrants Rob Jobs? Lessons of Australian History, 1861–1991," The Journal of Economic History, Cambridge University Press, vol. 53(04), pages 719-742, December.
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