Labor Importation and Unemployment of Local Workers in Taiwan

Abstract

Since the 1990s the labor market in Chinese Taipei has seen increasing employment of foreign workers vis-à-vis increasing local unemployment. The situation has sparked policy debates and calls for restricting the importation of foreign workers. Do foreign workers take away jobs from domestic workers? To what extent can domestic unemployment be attributed to labor importation? Who are the domestic workers affected by labor importation? These questions were explored using data from the 1996-99 Manpower Utilization Surveys. The study found that on the whole, there is no distinct relationship between labor importation and domestic unemployment. However, foreign labor does have a positive influence on employment for managerial/professional workers and a negative effect for the semi- and less-skilled construction workers. The use of foreign workers seems to affect domestic unemployment in sectors which are foreign labor-intensive sectors such as electronics and construction. Foreign workers do not complement domestic workers in managerial and professional occupations in foreign labor-intensive industries. The complementary effect becomes evident when all industries are considered in the model.