The Effects of Mandatory Maternity and Pregnancy Benefits on Women's Wages and Employment in Taiwan, 1984–1996

Abstract

The Labor Standards Law of Taiwan requires employers to offer maternity and pregnancy benefits. Because these requirements increase the cost to firms of employing young women, standard economic theory predicts that such workers will experience a relative decline in employment, wages, or both. Using data from Taiwan's Manpower Utilization Survey for the years 1978-96, the authors find that in those sectors of the economy covered by the legislation, wages and employment of young women did indeed fall relative to the wages and employment of two comparison groups, young men and older women.ince the 1960s, Taiwan has had high S economic growth, led by labor-intensive, export-oriented industries that rely heavily on cheap unskilled female labor. One reason the country was able to compete effectively in such industries was that young Taiwanese women had traditionally been willing to work for low wages for a few years before marriage. In 1984, however, responding to both external pressure (from trading partners like the United States) and internal political pressure to treat women more fairly, Taiwan adopted the Labor Standards Law (LSL).Standard economic theory predicts that workers who become more costly to employ will, barring special circumstances, experience reduced employment opportunities, or reduced wages, or both, relative to other workers. In this study we analyze data from Taiwan's Manpower Utilization Survey to investigate whether the LSL had such effects on young women in Taiwan. How the Labor Standards Law Protects Female WorkersSeveral provisions of the LSL mainly affect women. First, the LSL requires that a firm pay eight weeks' maternity leave. Full wages are paid if the worker has been employed by the firm for at least six months. In addition to paying full wages during maternity leaves, employers must pay replacement workers, who are likely to have less experience and thus lower productivity than those they replace. Employers no

The effects of parental leave extension on training for young women

“…Indeed, Waldfogel (1998) suggests that maternity leave may even increase young women's employment and wages, a finding corroborated by Zveglich and van der Meulen Rodgers's (2003) investigation of a similar reform in Taiwan that introduced an 8-week maternity leave. Nevertheless, these findings contrast with those of Lai and Masters (2005) for Taiwan, as well as with Gruber's (1994) finding of a negative effect on wages of variations in maternity benefits across the US. They also contrast with the results of European studies that use reforms or other control group designs with longer parental/maternity leave periods (up to 3 years).…”

“…Similar treatment-control group designs are used in Gruber (1994), Ruhm (1998), Waldfogel (1999, and Lai and Masters (2005). We exclude persons older than 55 years from all analyses because this group's outcomes may be affected by other factors like early retirement, which may evolve differentially between men and women.…”

The Effects of Employment Protection on Labor Turnover: Empirical Evidence From Taiwan

“…For example, the 6 Among the pre-LSL labor laws in Taiwan, the major one was the Factory Act, which was enacted in 1930 and amended in 1975. 7 See Lai and Master (2005) for an analysis of the adverse effects of LSL's maternity and pregnancy benefit provisions on women's employment and wages in Taiwan.…”

Rethinking work and family policy: The making and taking of parental leave in Australia

“…Theoretical and empirical accounts from conventional economics also preclude the private sector from amply providing paid maternity leave. Even those workers who value the benefit are likely to do so at levels below the full cost to employers, the latter of which includes an increment for administrative costs associated with hiring and training temporary workers (Lai & Masters, 2005;Summers, 1989). This perceived inequality in the eyes of the immediate parties to the employment relationship should also serve to dampen the likelihood that the private sector, strategic route, will provide non-union workers outside the public sector with access to paid maternity leave.…”

“…The notion of a positive relationship between a worker's income and his or her access to paid leave withers in the wake of theoretical and empirical evidence favouring compensating wage differentials, particularly with respect to maternity benefits (Gruber, 1994;Lai & Masters, 2005). This literature implies that for those that fully value paid maternity leave, wages will actually fall to offset the cost of the benefit to the employer, resulting in a negative relationship between income and probability of access to paid leave.…”