dc.description.abstract | In this paper we establish the demand model of foreign workers and native-born workers, based on the theory of labor demand. We mainly estimate the impact of the foreign workers on the demand of native-born workers, with particular emphasis on the “external employment stability fee plus foreign labor quota mechanism” (the so called additional policy). This paper also focuses on the impact of foreign labor management model on the employment of foreign workers, as well as the relationship between foreign workers and native-born workers′ working hours. These two issues are relatively rare in both domestic and foreign literature. An industry-scale panel data from 2012 to 2017 is constructed by using the “Foreign Labor Management and Application Survey” and the “Manpower Utilization Survey” for empirical analysis.
The empirical results show that foreign workers and native-born low-skill workers are a significant substitute relationship, and the elasticity of substitution between the two is 6.33, higher than those found in the related literature in earlier time periods. After the additional policy in 2013, the elasticity of substitution between the two increases to 24.06. Moreover, this study finds that the causes of the increase in foreign workers in recent years include the relatively higher domestic workers′ wages increases and the management methods related to foreign workers. In addition, for industries of low foreign worker proportion, foreign workers and native-born low-skilled workers are substitute; yet, they are complement with native-born high-skilled workers. However, for industries where foreign workers are employed at a higher proportion, foreign workers and native-born workers of all levels of skills become substitute. This may probably be related to industrial characteristics, such as the level of capital. As for the impact of working hours, this paper found that the correlation between foreign workers and native-born workers′ time is not significant, showing a decreasing trend for all workers in recent years. This may be due to that all workers are protected by the related labor law.
Based on the above empirical results, this paper suggests that the governmental authority should be cautious in further opening up the number of foreign workers in Taiwan, especially for industries of high foreign worker intensity. For industries of relatively low proportion of foreign workers, additional foreign workers could be increased; nevertheless, at the meantime, for low-skilled workers in those industries, policies improving their technical levels such as particular skill trainings are suggested. In addition, under the “New Economic Immigration Law”, firms are able to recruit middle-skilled foreign workers in Taiwan. Based on the mostly adverse impact of foreign workers on the labor demand for native-born workers, it should continue to evaluate the impact of the implementation of the “New Economic Immigration Law” on the labor market.
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