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Will a Free Trade Agreement with China Hurt Unskilled labor in Taiwan?
Title:  Will a Free Trade Agreement with China Hurt Unskilled labor in Taiwan?
Author: Lo    Chu-Ping
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Organization:  Taiwan University
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Conference presentation:  2010 CES CHINA CONFERENCE
Abstract:  A simple model is presented, where the personal service sector uses intensively unskilled labor while both the manufacturing and business service sectors use intensively skilled labor. I argue that an increase in the size of the business relative to the personal service sector moderates the impact of outsourcing on unskilled-labor’s welfare. A good government can create an environment favorable to the expansion of business services, raising real returns to unskilled labor and restraining manufacturing’s hollowing-out. Conversely, a bad government creates an environment favorable to the expansion of personal services, deteriorating both the wage inequality and real returns to unskilled labor.
Full-text paper link:  Will ECFA hurt unskilled labor in Taiwan.pdf
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