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

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  • Hsiao-chuan Chang

Abstract

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

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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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