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Do Foreign Workers Have An Adverse Effect On The Native Unskilled Labor In Taiwan?


  • Hsiao-chuan Chang


A decade has elapsed since the Taiwanese government first allowed the entry of foreign workers in 1989. A range of problems related to foreign workers have emerged and have become current issues in Taiwan. However, there is a lack of in-depth research into these issues as they relate to Taiwan. This paper is the first step to focus on the issue of native wages by investigating the wage differential between skilled and unskilled labor with importation of foreign workers. The main finding is that foreign workers do affect native unskilled labor negatively by enlarging the wage differential in both the short-and long-run. However, this adverse effect is not as serious as expected in the overall wage differential. This suggests the existence of another dominating factor(s). The Taiwanese public blame foreign workers for the wrong reasons. The policy strategies of increasing or decreasing the number of foreign workers have been examined. In order to prevent a further escalation of the wage differential, the Council of Labor Affairs should consider imposing a policy of not increasing the number of foreign workers.

Suggested Citation

  • Hsiao-chuan Chang, 2002. "Do Foreign Workers Have An Adverse Effect On The Native Unskilled Labor In Taiwan?," Department of Economics - Working Papers Series 837, The University of Melbourne.
  • Handle: RePEc:mlb:wpaper:837

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    References listed on IDEAS

    1. Borjas, George J & Freeman, Richard B & Katz, Lawrence, 1996. "Searching for the Effect of Immigration on the Labor Market," American Economic Review, American Economic Association, vol. 86(2), pages 246-251, May.
    2. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
    3. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1992. "On the Labor Market Effects of Immigration and Trade," NBER Chapters,in: Immigration and the Workforce: Economic Consequences for the United States and Source Areas, pages 213-244 National Bureau of Economic Research, Inc.
    4. Borjas, George J., 1999. "The economic analysis of immigration," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 28, pages 1697-1760 Elsevier.
    5. 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.
    6. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    7. James Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
    8. Butcher, Kristin F & Card, David, 1991. "Immigration and Wages: Evidence from the 1980's," American Economic Review, American Economic Association, vol. 81(2), pages 292-296, May.
    9. 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.
    10. Kristin Butcher & David Card, 1991. "Immigration and Wages: Evidence From the 1980's," Working Papers 661, Princeton University, Department of Economics, Industrial Relations Section..
    11. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, January.
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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making


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