Taiwan’s Changing Employment and Earnings Structure

[Excerpt] In its determined pursuit of economic development throughout the latter part of the twentieth century, Taiwan consistently succeeded in achieving growth rates that were amongst the highest in the world; however, in tandem with such growth, a number of significant changes also took place in the island\u27s labour market. This chapter begins by highlighting some of the most important of these aggregate changes, as follows: (i) the achievement, and subsequent maintenance of, essentially full employment; (ii) improvements in the overall mix of jobs, in particular, a steady reduction in the share of agricultural employment to total employment, a very important shift given that agriculture remains one of the lowest-paying sectors in the Taiwanese economy; (iii) a rise in the share of wage employees, and, in consequence, a fall in the share of own-account work and unpaid family work; this represents another important shift, since wage employees in Taiwan enjoy much higher standards of living than own-account workers and unpaid family workers; (iv) an increase in the share of professional positions and other high-level jobs; a further significant and valuable development, because these are quite clearly the best-paying jobs; (v) real improvements in the educational level of the labour force as a whole; and (vi) a rise in real earnings throughout every sector of the economy, with both male and female earnings having risen at the same pace, in both farm and non-farm households. In addition to all of these changes, real earnings across the entire Taiwanese economy have doubled every ten years, absolute poverty has fallen sharply and the Gini coefficient of individual earnings has remained essentially constant, indicating that income inequality remains strong (further details on all of the above developments are provided in the Appendix, Tables A2.1-A2.7). This chapter sets out to present brief analyses of the changes that have taken place in Taiwan between 1976 and 1993

An Estimation of Elasticities of Consumption Demand and Investment Demand for Owner-Occupied Housing in Taiwan : A Two-Period Model

Buying a house usually satisfies housing consumption demand and housing investment demand, simultaneously. In order to disentangle the above two types of demand, households, in this study, are separated into three subtenure groups i.e. renters, owners owning one house, and owners buying a second or more houses. Presumably, renting a house is for consumption only, while buying a second house is usually for investment purposes. Applying a two-period model and two data sets from DGBAS and from Land Bank of Taiwan, the estimated results are as follows: Firstly, the income elasticity of pure consumption demand for housing is very close to unity (1.0413). Secondly, the income elasticity for a pure investment demand is greater than one (1.2643). Finally, for a household owning only one house, the shares for consumption motive and for investment motive are 26% and 74%, respectively.Consumption demand, investment demand, elasticity and housing, Taiwan

The Global Economic Recession and Industrial Structure: Evidence from Four Asian Dragons

The collapse of exports that has attended the current global economic recession threatens the export-led economic growth of the four Asian dragons. To better understand the economic performances and future prospects of the four dragons, this paper first examines the economic structural changes that have taken place in Hong Kong, China; the Republic of Korea; Singapore; and Taipei,China, as well as the gradual shifting of the sources of economic growth away from the manufacturing sector and toward the service sector. Following this, a panel data set for the four dragons for the period 1995–2008 is constructed and a fixed-effects model applied to the data.global economic recession; asian dragons; new service development; industrial structure

Kinship and living arrangements in later life: the case of Taiwan

This article examines living arrangements in later life in Taiwan from the perspective of adult children. It focusses on the question of which adult child co-resides with his/her parents. It is hypothesized that the choice of living arrangement is primarily circumscribed by economic feasibility which varies during stages in the life cycle. Parents may live with children who are single or divorced, or who need their help. When all the children are married, they choose to live with those who are financially better off. Middle-aged children who have their own families are least likely to co-reside with parents. The article further addresses the question whether filial piety is abandoned by children who do not live with parents. A trend of declining frequency of visiting parents has been observed. Nevertheless, it has been found that children who have the greatest probability of living away from their parents tend to visit them most frequently

International Trade, Productivity Growth, Education and Wage Differentials: A Case Study of Taiwan.

The source of changes in the wage differential between skilled and unskilled labor has been an important subject of debate for several decades. International trade and productivity growth are two main causes that have been suggested from large country studies. Recent research proposes education as another influence. All three causes have been significantly associated with Taiwan's economic development. This paper attempts to contribute to the literature by investigating wage differentials of Taiwan, a small open economy with a paucity of study on the issue of trade and wages. An Error Correction Model (ECM) incorporating both short and long term run effects is employed.WAGES ; INTERNATIONAL TRADE ; PRODUCTIVITY

Economic gains and health benefits from a new cigarette tax scheme in Taiwan: a simulation using the CGE model

BACKGROUND: This study evaluates the impact of an increase in cigarette tax in Taiwan in terms of the effects it has on the overall economy and the health benefits that it brings. METHODS: The multisector computable general equilibrium (CGE) model was used to simulate the impact of reduced cigarette consumption resulting from a new tax scheme on the entire economy gains and on health benefits. RESULTS: The results predict that because of the new tax scheme, there should be a marked reduction in cigarette consumption but a notable increase in health benefits that include saving between 28,125 and 56,250 lives. This could save NT$1.222~2.445 billion (where US$1 = NT$34.6) annually in life-threatening, cigarette-related health insurance expenses which exceeds the projected decrease of NT$1.275 billion in Gross Domestic Product (GDP) because of reduced consumption and therefore tax revenue. CONCLUSION: Overall, the increased cigarette excise tax will be beneficial in terms of both the health of the general public and the economy as a whole

Taiwan: Compulsory Occupational Pensions Still Dominate

The compulsory occupational pension and insurance system, along with personal savings and family supports, form the backbone of social security in Taiwan. Due to the relatively low contribution ratio, public sector pensions, as well as private sector pensions, are seriously under-funded, and this will lay enormous pressure on future government budgets if reforms are not implemented soon. The new Labor Pension Bill will make drastic policy shifts from defined benefit to defined contribution, from non-portable to portable, and finally from government management of funds to partial private management.

Industrial Agglomeration, Geographic Innovation and Total Factor Productivity: The Case of Taiwan

The paper analyses the impact of geographic innovation on Total Factor Productivity (TFP) in Taiwan. Using 242 four-digit standard industrial classification (SIC) industries in Taiwan in 2001, we compute TFP by estimating Translog production functions with K, L, E and M inputs, and measure the geographic innovative activity using both Krugman's Gini coefficients and the location Herfindahl index. We also consider the geographic innovation variable as an endogenous variable and use 2SLS to obtain a consistent, albeit inefficient, estimator. The empirical results show a significantly positive effect of geographic innovation, as well as R&D expenditure, on TFP. These results are robust for the Gini coefficients and location Herfindahl index, when industry characteristics and heteroskedasticity are controlled. Moreover, according to the endogeneity of geographic innovation, the Hausman test shows that the geographic innovation variable should be treated as endogenous, which supports the modern theory of industrial clustering about innovation spillovers within clusters.Industry agglomeration; Geographic innovation; Total factor productivity; Cluster; Research and Development

The role of demography on per capita output growth and saving rates

Computable OLG growth models and "convergence models" differ in their assessment of the extent to which demography influences economic growth. In this paper, I show that computable OLG growth models produce results similar to those of convergence models when more detailed demographic information is used. To do so, I implement a general equilibrium overlapping generations model to explain Taiwan's economic miracle during the period 1965-2005. I find that Taiwan's demographic transition accounts for 22% of per capita output growth, 16.4% of the investment rate, and 18.5% of the savings rate for the period 1965-2005. Decomposing the demographic effect into its components, I find that fertility alone explains the impact of demographic changes in per capita output growth, while both fertility and mortality explain investment and saving rates. Assuming a small open economy, I find that investment rates increase with more rapid population growth, while saving rates follows the dependence hypothesis (Coale and Hoover, 1958). Under a closed-economy, the population growth rate has a negative influence on economic growth.Taiwan, demography, economic growth