The Effects of Mandatory Maternity and Pregnancy Benefits on Women's Wages and Employment in Taiwan, 1984-1996. Yu- cheng Lai , ChangJung Christian University, Taiwan Stanley Masters, Binghamton University. outline. Background Theoretical Expectations Estimations Conclusions
Yu-cheng Lai , ChangJung Christian University, Taiwan
Stanley Masters, Binghamton University
1. 1984-1998 manufacturing, mining, electricity, construction,
transport, and mass media.
Enforcement---- on Women's Wages and Employment in Taiwan, 1984-1996
The 1993 LIL regulates all local inspection agencies, which send a clear message to employers about the need to comply with the LSL
1. if wages are perfectly flexible and if female workers value maternity/pregnancy benefits at cost, then no changes in employment and wage rate declines, as shown by point E.
2. If wages are flexible and women value the mandated benefits at less than their cost to the employer, wage rates declines and employment declines, as shown by point B.
3. If the wage is rigid, there will be an excess supply of labor at the original wage, leading to a decline in employment and possibly in hours worked per week.
The most realistic case probably is the in-between one, in which there is some wage flexibility. In this case, benefits lead to smaller wage reductions than if wages were flexible and to employment reductions smaller than if wages were completely rigid.
the Manpower Utilization Survey, a biannual survey of earnings and employment available since 1978.
DDD method to estimate the effects of LSL on wage.
W--monthly real wage rate
F---gender dummy variable, 1 for young women
Covered----dummy variable, 1 for LSL covered industry
YEARi -----a set o dummy variables for the year 1978 to 1994,
with 1984 as the base year.
A set of human capital variables as controls----
education, experience (linear and quadratic), tenure (linear and quadratic), and each of these variables interacted with F, the dummy for gender.
Empirical specification which there is some wage flexibility. In this case, benefits lead to smaller wage reductions than if wages were flexible and to employment reductions smaller than if wages were completely rigid.
EMP, for whether the person is employed in an industry covered by the legislation.
3. The strong effects of the LSL on employment as well as wage rates suggest that the increased costs of employing young women were greater than the decline in their wage rates and that wages were only partially flexible.
4. wage rates suggest that the value employees placed on the mandated benefits was below their cost to employers. Thus the demand curve shifted by the full amount of the benefits, but the supply curve shifted less, leading to a decline both in the wage rate and in employment.
In the short run the LSL has had an adverse effect on the relative economic position of women, since it reduces both their employment opportunities and their average wage rate.
In the long run, however, the LSL may well lead to a reduction in economic inequality by gender. With more human capital, women should attain higher earnings and thus have an incentive to work even more. In this way a dynamic may emerge that could substantially lessen gender inequality in Taiwan.