The Effect of Minimum Wage on Youth Employment and Unemployment in Taiwan

Minimum wage, Employment rate, Labor participation rate, Unemployment rate

The Sources of Taiwan's Regional Unemployment : A Cross-Region Panel Analysis

In recent years under the trendof a global recession andd omestic structural change, the unemployment rate in Taiwan has reacheda recordhigh of above 5% which in turn has generateda series of social problems. Unemployment has now become the core issue in the government's agenda. From historical regional data, we findthat there are distinct variations of the unemployment rate among 23 cities andprefectures; moreover, this differentiation seems to persist over time. We analyze this regional unemployment trendby equilibrium and disequilibrium factors controlling for the macro environment using 23 cities' andprefectures' cross section and time series data pertaining to the 1995 to 2004 period. A cross-region panel study shows that the major factors that explain the persistent but divergent regional unemployment rates (aside from the aggregate macro environment which explains about one quarter) are demographic composition, family characteristics, industrial structure, population density, migration costs, and labor mobility. Understanding the sources of regional unemployment will help us to determine the appropriate policies to mitigate the unemployment rate across regions.Unemployment Rate, Demographic Composition, Compensating Wage Differentials, Urbanization, Labor Mobility, Migration

Mergers and Acquisitions in Latin America: Industrial Productivity and Corporate Governance

This paper examines the impact of industrial productivity on transnationals M&As from OECD countries towards Latin American countries in the period 1996 to 2010. It also analyzes the relationship between external mechanism of corporate governance and transnational M&As. For this purpose we use a gravitational model at the industry level. We find that industry productivity and higher standards of corporate governance in the country of origin promote transnational M&As activity. However, it is also found that higher levels of capital and technological productivity decreases transnational M&As activity

Returns to scale, productive efficiency, and optimal firm size evidence from Taiwan's firm data

By using Taiwan's census firm data, this paper estimates and tests the variable returns to scale hypothesis for aggregate manufacturing and two-digit industries. An efficiency measure is constructed to further examine the size-efficiency relations among two-digit industries. Analysis indicates that increasing returns exist at the aggregate manufacturing level and its magnitude is higher for exporting firms than for non-exporting firms. Moreover, trade is beneficial only for small firms. However, the property of increasing returns diminishes for most of the industries at the two-digit level, particularly for the exporting firms. This sharp comparison between aggregate and two-digit level results suggests that trade is conducive to productivity, and provides an indication of the specific form of technology spillovers among firms and across industries. Further investigation of the relationship between productive efficiency and firm size renders the result that optimal firm size is small for exporting firms in most industries, particularly in the most export-oriented ones. The technology spillover effect among firms and across industries is likely the reason for being small and efficient. Our results also indicate that an industry-wide spillover effect across firms within the same industry is roughly one-sixth of the firm-specific export-induced learning effect. Findings in this study provide valuable insight into Taiwan's economic development and also provide a development strategy for developing countries to follow.

Industry-Specific Human Capital and the Wage Profile: Evidence from Taiwan

Using data from Taiwan’s Manpower Utilization Survey (1979-1999), this paper finds evidence that supports the industry-specific human capital effect on wage tenure profiles. We examine data on people who voluntarily or involuntarily change job within or across industries last year. Pre-switching work experience is used as an indirect measure for testing the industry-specific human capital by comparing the effect between stayers and movers. Other things being equal, holding firm tenure constant movers actually incur wage loss, measured by the wage premium of the work experience. However, the greater than average firm tenure effect, especially for movers in the voluntary group, reflects an underlying job-related matching process. It is mainly for this gain from better job match that overcomes the wage loss that stimulates cross-industry job change. We also find that the effect of general work experience declines with education, while the effect of industry-specific human capital increases with education. The experience of Taiwan’s labor market confirms the existence of industry-specific human capital, and the rapid voluntary job switching across industries is consistent with the search theory of job match

Heterogeneity, comparative advantage, and return to education: The case of Taiwan

By considering heterogeneity in abilities and self-selection in educational choice, this paper adopts the heterogeneous human capital model to estimate rate of return to university education using data from the 1990 and 2000 Taiwan's Manpower Utilization Surveys. The Taiwan empirical study shows that significant heterogeneous return to education does exist, and that the educational choice was made according to the principle of comparative advantage. The estimated rates of return for attaining university were 19% and 15%, much higher than the average rate of return of 11.55 and 6.6%, for 1990 and 2000, respectively. The declining trend of return to university education may have been caused by the rapid expansion of the number of colleges and universities and the increasing supply of college graduates in the 1990s.Heterogeneous human capital Sorting gain Selection bias Return to education Marginal treatment effect Average treatment effect

Foreign direct investment, R&D and spillover efficiency: Evidence from Taiwan's manufacturing firms

Using Taiwanese firm-level data, we confirm that foreign direct investment and R&D have a positive impact, or spillover effect, on productivity. Furthermore, labour quality, firm size, market structure, and export orientation all affect a firm's productivity. Applying Heckman's [1976] two-stage estimation method, we find that firms self-select into R&D or non-R&D groups. After correcting for this selection bias, we find that foreign direct investment, local technology purchase, and outward foreign investment are substitutes to R&D activity. These results are mainly due to the significant effect of industry-wide technology spillovers. The major policy implications derived from this study are that governments in developing countries may first wish to adopt policies encouraging foreign direct investment to foster technology transfer and industry-wide knowledge spillovers in the short run. However, once the country's technological capability is established it appears critical to switch towards policies that provide a preferred environment to stimulate R&D investment (for example, infrastructure improvement and protection of intellectual property rights) to allow for sustainable economic growth.