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The Future Labor Force of an Aging Taiwan: The Importance of Education and Female Labor Supply

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Abstract

This study uses multi-state cohort component projections and detailed vital statistics data to project the future Taiwanese population by age, sex, and education up to 2050. These are the first education-specific population projections for Taiwan, and they reveal how young highly educated cohorts during the next decades will replace older cohorts with lower levels of educational attainment. The results of the population projections enter our estimation of the future composition of the Taiwanese labor force. Incorporating education as an extra dimension in labor force projections allows us to make inferences about the quality of future labor supply in a rapidly aging Taiwan and the leverage of expanding economic activity across the life course, particularly of women. At present, women’s economic activity above age 25 in Taiwan is significantly lower than men’s and also much lower than women's in Western developed nations. Some of the expected adverse economic consequences of population aging can likely be alleviated by having a more educated and consequently more productive labor force. The overall results and conclusions of our study, though based on the Taiwanese context, apply to other Asian economies with rapidly aging populations and currently comparatively low levels of female labor force participation as well.

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Fig. 1

Source: data acquired from the Statistical Yearbook of the Republic of China (1970, 1990, 2010), published by the Department of Household Registration, Ministry of the Interior, Taiwan

Fig. 2

Source: data acquired from the Statistical Yearbook of the Republic of China (1975, 1995, 2010), published by the Department of Household Registration, Ministry of the Interior, Taiwan

Fig. 3

Source: labor force participation data acquired from “Time-series Data Bank, Pre-2012,″ published by the Directorate General of Budget, Accounting, and Statistics, Executive Yuan, Taiwan (http://www.dgbas.gov.tw/ct.asp?xItem=18843&ctNode=4943)

Fig. 4

Source: data for years 1975–2010 are acquired from the Statistical Yearbook of the Republic of China, published by the Department of Household Registration, Ministry of the Interior, Taiwan. For years after 2010, the data for the educational composition are projections done by the authors

Fig. 5

Source: data for year 2010 come from the Statistical Yearbook of the Republic of China, published by the Department of Household Registration, Ministry of the Interior, Taiwan

Fig. 6

Source: authors’ own calculations

Fig. 7

Source: authors’ own calculations

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Notes

  1. Junior college education in Taiwan refers to a type of tertiary education that emphasizes applied and vocational education. There used to be three types of junior colleges. The 2- and 4-year junior colleges recruit vocational high school graduates; the 3-year junior colleges accept high school graduates, and finally the 5-year junior colleges admit junior high school graduates. Upon finishing any of these junior college education programs, students are considered having completed college education and will be eligible to apply for a master’s program should they wish to continue their education. Many of these junior colleges reformed their curricula and have been upgraded to be “university of (science and) technology” since the late 1990s as a result of a recent wave of educational reform.

  2. The relationship between female employment and fertility can be more complex at the micro-level and can depend on variations in country-specific policies (Gauthier 2007; Matysiak and Vignoli 2008).

  3. Education system in Taiwan is characterized by 6 years of elementary education, followed by 3 years of junior high school education. Junior high school graduates can choose to proceed to regular high schools (academic track) or vocational ones (both are 3 years). Another option is to enter 5-year vocational school, which will grant a junior college degree. High school graduates who proceed to tertiary have the options of entering regular 4-year universities/colleges or receiving a junior college degree in either a 2-year or a 3-year college (which is equivalent to the associate degree in the United States).

  4. The labor force—synonymous to the (economically) active population and labor supply—comprises both, employed and unemployed persons. The labor force participation rate is defined as (employed + unemployed)/(population) × 100%. It can be calculated for individual age-groups or aggregated across the adult population.

  5. Until the rapid expansion of higher education in the late 1990s, such a shortage results from the fact that only about 8% of each birth cohort received a college degree (5% men and 3% women). A substantial share of male students was channeled into the vocational education system after junior high schools to meet the demand of technicians during the process of economic development.

  6. There is not a category that is comparable to ISCED 4 (post-secondary, non-tertiary education) in Taiwan. Thus, ISCED 4 is not part of the current study.

  7. To estimate the effect of our assumptions on the outcome of the projections, we ran an additional seven scenarios where we varied the assumptions about Taiwan’s future fertility, mortality, migration, and education transitions. This showed that reasonable changes in the assumptions for fertility, mortality, and migration did not change the overall picture at all. Concerning educational attainment, our assumptions about the transition into university might actually turn out to be on the conservative side, since we assume a leveling off of the transition trend from high school into college/university among 25–29-year-olds once two-thirds in this age-group make this transition (projected to happen in 2020). If we let the past trend continue so that the transition probability into college/university eventually reaches 100% within this age-group (projected for 2030 for women and 2035 for men), the educational upgrading of the future Taiwanese labor force might be even stronger than what we estimate. (Detailed results of these alternative scenarios are available from the authors upon request).

  8. The last age-group that sex- and education-specific labor force participation data were available for is ages 65+. This causes problems when doing projections, since the age composition within this age-group will change drastically during the projection period, shifting toward higher age-groups. Hence, we estimated participation rates for 2005 and 2010 for two further closed age-groups (65–69 and 70–74) by assuming participation at age 75 and higher is 0 and interpolating linearly in between ages 60–64 and 75+. We applied the education gradient observed for 65+ for all ages above 65 and adjusted the interpolated values with an adjustment factor by minimizing the difference between the labor force size 65+ when applying the rates for the whole open-ended age-group and the labor force size obtained when applying individual rates for 65–69 and 70–74.

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Acknowledgements

Funding was provided by the Ministry of Science and Technology, Taiwan (Grant No. 105-2410-H-001-043-MY2) and the “Wittgenstein Award” of the Austrian Science Fund (FWF): Z171-G11. The authors thank the editor and the reviewers for helpful comments on an earlier version of this paper. We also thank Fen-Chieh Felice Wu for excellent research assistance.

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Authors and Affiliations

  1. Institute of Sociology, Academia Sinica, 128, Sec. 2, Academia Road, Taipei, 11529, Taiwan

    Yen-hsin Alice Cheng

  2. College of Population Studies, Chulalongkorn University, Visid Prajuabmoh Building, Bangkok, 10330, Thailand

    Elke Loichinger

  3. International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austria

    Elke Loichinger

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  1. Yen-hsin Alice Cheng
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Correspondence to Yen-hsin Alice Cheng.

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Cheng, Yh.A., Loichinger, E. The Future Labor Force of an Aging Taiwan: The Importance of Education and Female Labor Supply. Popul Res Policy Rev 36, 441–466 (2017). https://doi.org/10.1007/s11113-016-9423-z

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