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Education, Technology and the Wage Structure in Taiwan, 1979-1998

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  • James P. Vere

    (Princeton University)

Abstract

In this paper we study the wage structure effects of Taiwan's compulsory education policy, to which we attribute substantial changes in the educational composition of the population, and Taiwan?s science and technology development policy, to which we attribute changes in the complementarity of skilled and unskilled labor. In the first part, we quantify these changes and describe differences in educational attainment in Taiwan across birth cohorts. In the second part, we use regression analysis to describe changes in Taiwan's wage structure, decomposing the wage return to education into two components, a fixed birth cohort component and a variable time component. We find evidence for general equilibrium effects reducing the wage return to higher education for better-educated cohorts. In the third part, we present estimates of the elasticities of complementarity between skilled and unskilled labor in Taiwan and evidence that these elasticities have changed over the time period studied in step with the new technology. We conclude that both general equilibrium effects and structural changes in production are needed to account for the observed changes in Taiwan''s wage structure.

Suggested Citation

  • James P. Vere, 2001. "Education, Technology and the Wage Structure in Taiwan, 1979-1998," Working Papers 208, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    • Handle: RePEc:pri:rpdevs:vere_education_technology_wage.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Taiwan;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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