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An Empirical Study of the Backward-Bending Labor Supply Curve of Older Workers in Taiwan: Long-Term Data Analysis from 1978 to 2023

Author

Listed:
  • Hen-Chen Liu
  • Wen-Chen Wu
  • Bin-Tzong Chie

Abstract

This study investigates the existence of a backward-bending labor supply curve among older workers in Taiwan, utilizing an extensive longitudinal dataset spanning 46 years (1978–2023). Employing weekly working hours of individuals aged 65 and above as the primary metric, we construct a quadratic empirical model to capture nonlinear wage effects while controlling for demographic characteristics, household structure, and regional fixed effects. Our primary findings indicate that while a nonlinear relationship is statistically present, the criteria for a theoretically consistent "backward-bending" phenomenon are not met in the main model across the observed period. However, robustness checks utilizing the logarithm of wages reveal a significant backward-bending trend in 43 out of 46 years, suggesting that model specification and wage distribution play a pivotal role in empirical outcomes. These results imply that the labor supply behavior of older workers is highly sensitive to functional forms, highlighting the shifting balance between substitution and income effects in an aging economy. JEL classification numbers: J14, J22, J31, C21.

Suggested Citation

  • Hen-Chen Liu & Wen-Chen Wu & Bin-Tzong Chie, 2026. "An Empirical Study of the Backward-Bending Labor Supply Curve of Older Workers in Taiwan: Long-Term Data Analysis from 1978 to 2023," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 16(3), pages 1-6.
    • Handle: RePEc:spt:admaec:v:16:y:2026:i:3:f:16_3_6
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    References listed on IDEAS

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    1. Axel H. Börsch-Supan & Courtney Coile, 2018. "Social Security Programs and Retirement Around the World: Reforms and Retirement Incentives – Introduction and Summary," NBER Working Papers 25280, National Bureau of Economic Research, Inc.
    2. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
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    Keywords

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    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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