The Impact of Outsourcing and R&D Investment on Taiwan’s Labor Market
Date Issued
2009
Date
2009
Author(s)
Lu, Ya-Ju
Abstract
As the progress of technology and the flourishing development of international trading, manufacturers nowadays could decide production patterns more freely and efficiently. However, inter-regional labor demand has also changed due to the shift of production patterns.Outsourcing production and R&D investment have increased the demand of skilled labor, but this situation is not conducive to unskilled labor. In this research, we would inspect how manufacturers’ outsourcing production, R&D, and investment of fundamental education influence the wage of skilled labor as well as unskilled one in Taiwan during 1999 to 2006. The research analysis is based on Feenstra and Hanson’s model(1996), with slight modification and educational variables. The result shows that in manufacturing industry in Taiwan during 1999 to 2006, outsourcing production could explain about 33% to 38% of the wage bill share variation of skilled labor, while R&D could explain about 13% of the wage bill share variation of skilled labor. In addition, investment of fundamental education would help to reduce the wage inequality between skilled and unskilled labor. For Taiwan, which highly depends upon international trade, globalization is certainly inevitable. Nevertheless, as the rising trade and advanced technology, the different skill level of labor has also brought the wage inequality problem. The research result shows investment of fundamental education would assist in reducing the wage inequality between skilled and unskilled labor. Education is probably a way to rear more skilled labor, and to enrich technology stock of the country. Perhaps this approach would take time to yield positive result, but it would lead to industrial upgrading and entire labor force quality improvement simultaneously. Then labor force and enterprises could enjoy the benefits of free trade to enhance the growth of national power. Therefore, education is conceivably the direction to put efforts.
Subjects
outsourcing
R&D
skilled labor
unskilled labor
wage inequality
SDGs
Type
thesis
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