| dc.description.abstract | To understand the changes of labor quality in the process of industrial structure transition, this article compiles labor input indices that capture both employment changes and quality improvement of labor in Taiwan, from 1978 to 2014. Up to 75.87% of average annual labor input growth is from quality improvement. Further decomposition reveals that the most important source of growth is educational attainment, followed by industry structure. Making good use of agricultural release, population is transferred into the nonagricultural sector, and the advantage of cumulative work experience of the high-aged labor resource is quite favorable for improving the effect of labor quality.
For the source of contributions to Taiwan’s annual GDP growth rate, we found that the contribution of total factor inputs (TFP) to economic growth is declining, so that technological innovation cannot be ignored. We also found that labor, capital and TFP all show diminishing returns. However, with the contribution of each input component to GDP growth rate, the proportion of highly skilled human capital to labor input is relatively large and increasing. Taiwan is a newly industrialized country, but because of diminishing returns to factor inputs, catch-up has been slower than hoped. Adding to factor inputs has a relatively small effect on productivity. The main source of continuous economic growth is from labor quality, especially from highly skilled human capital. Making good use of these human resources creates a stable source of sustained economic growth.
Labor quality is a major contributor to Taiwan’s economic growth. Therefore, it is especially important to raise the educational level. Looking to the process of globalization, we see that this brought about changes in industrial structure that impacted on the local demand for labor. Education aimed at specific industries should show whether there are particular qualities these industries require. We applied the labor demand model and used DGBAS data and data from the Ministry of Economic Affairs and Statistics Department for our in-depth analysis. Our empirical findings are that the impacts of exogenous shocks are inconsistent for the various industries and the elasticity of labor demand has increased for most of them. The main impact of fluctuations in the labor market is through the substitution effect, but this also increases the workers’ employment risks and uncertainties. To reduce the risk to employment in labor demand, the quality of labor should be enhanced, especially through education and training, which can really improve resilience to external shocks. Of course, we must have coordinated response measures related to labor market institutions and the employment security system to reduce negative impacts on the labor market, while also playing an active and positive role in stabilizing employment | en_US |