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

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  • Hsiao-chuan Chang

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.

Suggested Citation

  • Hsiao-chuan Chang, 2002. "Are Foreign Workers Responsible For The Increasing Unemployment Rate In Taiwan?," Department of Economics - Working Papers Series 853, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:853
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    References listed on IDEAS

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    More about this item

    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
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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