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The Effect of Foreign Workers on the Native Wages in Taiwan - A Dynamic Intertemporal General Equilibrium Model

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  • Chang, Hsiao-Chuan

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. This paper is 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. The policy strategies of increasing or decreasing the number of foreign workers have been examined. In order to prevent a further contribution of foreign workers to the wage differential, the Council of Labor Affairs should consider imposing a policy of not increasing the number of foreign workers.

Suggested Citation

  • Chang, Hsiao-Chuan, 2004. "The Effect of Foreign Workers on the Native Wages in Taiwan - A Dynamic Intertemporal General Equilibrium Model," Conference papers 331172, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331172
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    References listed on IDEAS

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    1. Brown, Drusilla K. & Deardorff, Alan V. & Stern, Robert M., 1996. "Computational Analysis of the Economic Effects of an East Asian Preferential Trading Bloc," Journal of the Japanese and International Economies, Elsevier, vol. 10(1), pages 37-70, March.
    2. Jeffrey A. Frankel, 1997. "Regional Trading Blocs in the World Economic System," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 72.
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