Title

Education, Technology and the Wage Structure in Taiwan, 1979-1998

Author(s)

James P. Vere James Vere (Princeton University)

Abstract

In this paper we study the wage structure effects of Taiwan's compulsory education policy, to which we attribute substantial changes in the educational composition of the population, and Taiwan?s science and technology development policy, to which we attribute changes in the complementarity of skilled and unskilled labor. In the first part, we quantify these changes and describe differences in educational attainment in Taiwan across birth cohorts. In the second part, we use regression analysis to describe changes in Taiwan's wage structure, decomposing the wage return to education into two components, a fixed birth cohort component and a variable time component. We find evidence for general equilibrium effects reducing the wage return to higher education for better-educated cohorts. In the third part, we present estimates of the elasticities of complementarity between skilled and unskilled labor in Taiwan and evidence that these elasticities have changed over the time period studied in step with the new technology. We conclude that both general equilibrium effects and structural changes in production are needed to account for the observed changes in Taiwan''s wage structure.

Creation Date

2001-10

Section URL ID

RPDS

Paper Number

vere_education_technology_wage.pdf

URL

https://rpds.princeton.edu/sites/rpds/files/media/vere_education_technology_wage.pdf

File Function

Jel

J31, O33

Keyword(s)

Taiwan

Suppress

false

Series

5