A Study on Taiwan\'s Alien Worker Policy

This study also utilizes questionnaire survey to collect firm\'s opinion on alien worker policy. In our survey, we concentrated on those firms that hire alien workers. From the survey it is found that the majority of the surveyed firms suggested that the most appropriate number of alien workers for Taiwan is around 300 thousand persons, which is quiet close to what the actual approved number is.

In addition, this survey also found alien workers in Taiwan are an average, accounted for roughly 67 percent of the unskilled domestic worker\'s labor cost average. This study then utilize SURE regression model to study the production relationship among alien workers, capital, domestic skilled workers and unskilled domestic workers. Our empirical results show that alien workers and domestic unskilled workers are complementary to each other while alien workers and capital as well as alien workers and skilled domestic workers are substitutional to each other.

Consequently, with the massive employment of the alien workers in Taiwan it will cut down the usage of both capital and skilled workers and it will adversely affect the drive for industrial upgrading in Taiwan. Finally, it is suggested in this study that the total amount of alien workers in Taiwan should be, firstly, capped at 300 thousand workers and them cut it down gradually. The government can also consider raising the tax, which is levied to those employers who hire alien workers.

Finally, it is suggested in this study that through these policies not only domestic marginal workers can be better protected but the drive for industrial upgrading can also be achieved more effectively.