A Macro-Econometric Research on Unemployment in Taiwan
Date Issued
2011
Date
2011
Author(s)
Chen, I-Hsun
Abstract
The problem of unemployment not only affects individual living standard but also impairs the growth of economy. This paper constructs Taiwan’s macroeconomic model which captures labor market and employs this model to investigate the following impacts on the economy: financial crisis, the shifts of domestic firms to mainland China due to market liberalization and lower wages.
Facing higher unemployment rate during economic fluctuations, Taiwan government gives employment insurance to the unemployed, but this subsidy may make people search job passively. The empirical results show that increasing unemployment benefits will raise the unemployment rate and decrease domestic production and economic growth rate. Therefore, the government intends to investigate the forces behind unemployment and make appropriate policies to lower the unemployment rate efficiently.
Deindustrialization has started in Taiwan since 1997. The recent trade competition from mainland China after trade liberalization further exacerbates Taiwan economy. Our research finds that unemployment rate is sensitive to deindustrialization. Hence, government needs to focus on programs such as job-training and industry-university cooperation in order to lessen the impacts from trade liberalization.
The growth engine in Taiwan has converted from export orientation to domestic demand. The structural unemployed workers can be absorbed by increasing added value of services. In this paper, we find that increasing wages will raise the labor productivity and lower the unemployment rate. We also suggest the government and the enterprise should adopt proper measures to lift wages.
Subjects
macro econometric model
scenario simulations
unemployment insurance
deindustrialization
wages
unemployment rate
SDGs
Type
thesis
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