INCREASE IN LABOR FORCE PARTICIPATION RATE AND URBANIZATION IN TAIWAN

Transcription

1 -133- INCREASE IN LABOR FORCE PARTICIPATION RATE AND URBANIZATION IN TAIWAN Minq-Cheno Chang* INTRODUCTION The crude activity rate in Taiwan increased rapidly from 1956 to 1969: from 28.6% to 34.9%-an increase of 22%. Such an increase deserves special attention, because, among underdeveloped areas Taiwan is one of the very few to have experienced such rapid increase and economic growth throughout the period.' An important question about such an increase in the labor force participation rate is whether it results from real increases in the activity rate of the population. or from composition of population? changes in age Approximate answers to this question are possible for Taiwan, because Taiwan is one of the few places to possess a household registration system which permits the construction of a set of age specific activity rates for 1956 and 1969 (see Table 1). With these statistical resources, it is possible to analyse the increase in Taiwan's labor force rate. As can be seen from Table 1, the activity rate for each age group had significantly increased in this period especially for younger and older age groups. Beside the effect of the changes in age structure. what factors are governing such *Ming-Cheng Chang is Chief of the Survey and Research Division, Committee on Family Planning (Former Taiwan Population Studies Center), Taiwan Provincial Health Department 1. Per capita income increased from $137 to $235 in terms of constant 1964 dollars between 1956 and Industrial production increased more than fourfold and agricultural production doubled durig the period ( 1 )

2 -134- increases. in activity rates? In a land-scarce and labour-abundant economy like Taiwan, a possible way to answer this question is to examine the urban growth in this period. The basic assumption on this is that a continual flow of people from the rural areas to the cities would reduce rural unemployment and increase this economic activity rate. It is simply because urbanization may be economically advantageous if there is a corresponding shift of the labor force out of low-wage, low-productivity industries into more efficient, high-paid and modern Industries." Between 1956 and 1969, Taiwan had made a considerable economic growth (see note 1). Accordingly, an important aspect of the change which went with this economic growth was the decline in proportionate share of the agricultural sector in the labor force (from 55.5% in 1956 to 41.5% in 1969) and of course, this is related to urbanization. In the first part of this paper I shell apply the direct standardization method to analyze the effect of changes in age structure on the increase in crude activity rate between 1956 and In the second part of this paper, I shall begin to discuss the shift of population and labor force among different types of subdivisions in Taiwan which are related with degree of urbanization. In the last part I shall discuss the changes in structure of the labor force in this period which is considered as the result of urbanization. CHANGING AGE DISTRIBUTION AS A POSSIBLE CAUSE OF ACTIVITY RATE INCREASE The trends of real activity rate in Taiwan can not be understood without noting some distortions in its age distribution during the past 14 years (Table 2). 2 Durand, John D. and Karen C. Holden, Me'hoJ$ for A.nalyzi.ng CoRtPJnen~ of C.i ln~e in Sise and Serustur«of,.~e Labor Force. U of Penn. Population Studies Center, ATR, No.8, P.39 ( 2 )

3 -135- Table 1. Age Specific Activity Rates for Both Sexes, Males Age group --~ and Females in Taiwan, ~.,_.~---~~--~- Both sexes Male Fetje Both sexes Male~ f9ii4pl'( l; and more '5 Total Source: 1. Demographic Reference: Taiwan, Taiwan Demographic Fact Book & Supplementary Tabulation. Table 2. Per Cent Age Distribution in Taiwan 1956 and 1969 Age group Both sexes Male Female ----~~----_._~ Both sexes Male Female and more Total % No. 9,234,012 4,796,195 4,594,186 14,096,294 7,395,927 6,700,367 Source: Same as Table 1. e 3 )

4 -136- The proportions of Tiwan's nonworking population aged below 15 fell from 43.6% in 1956 to 41.1% in On the other hand, the proportions of working age population increased from 56.4% to 58.93"; in the corresponding period. However, the proportions of working population in two age groups and were smaller in 1969than in This is probably the result of the very low birth rate and high infant and child mortality rates during World War II. For the rest of age groups, the proportions were larger in 1969 than in Other things being equal, we would expect, then, that crude activity rates should have increased between 1956 and 1969, even if activity rate at each age group had remained constant, simply because there were relatively more working population in the prime working years(35-54). Given these peculiarities in age distribution, it is necessary to standardize for age changes in order to assesss the real trends in activity rate, part from the effects of age. If we assume that the age distribution of 1956 had remained constant to 1969, the result of such standardizations for both sexes, males and females are shown in Table 3. Table 3. Summary Measures of Activity Rates and Changes for Taiwan, 1956 and 1969 Summary measures Change Crude activity rate: Both sexes Male Female Activity rate standardized directly On basis of 1956 age distribution: Both Male Female Percentage increase in activity rate attributable to change in age distribution: Both sexes Male Female ( 4 )

5 -137- Between 1956 and 1969, the crude activity rate increased by 22%, but only about one-fifth of this increase was a result of changes in the age distribution and a little more than four-fifths was the result of genuine increase in age specific atcivity rates. For the male activity rates, the effect of changes in age structure is more than for the female, 57.4% against 6.7%. This means that most of increase increase in female activity rate, from 10.7% in 1956 to 18.2% in 1969, was attributable to the changes in the females' age specific activity rates, that is, about 93% On the other hand, out the 9.4% increase in male activity rate, more than half was due to the change in age structure. Therefore, the increase in crude activity rate during this period was mainly due to the increase in female activity rate..labor FORCE GROWTH AND INTERNAL MIGRATION, So far our analysis has indicated that the increase in the crude activity rate beween 1956 and 1969 was mainly attributable to the increases in age specific activity rates. Can such increase indicate that the growing industries provided jobs for amny members of the growing urban labor force? To answer this question, we must examine urban and rural pattern of population and labor force growth between 1956 and A. Population and Labor Force Growth Among Minor Dlvlslons of Taiwan Taiwan is administratively divided into 5 big cities and 16 counties. All of the area within the counties is subdivided into smaller adminstrative units. As of 1969 these subdivisions comprised a total of eight small cities, 78 urban townships, 204 rural townships, and 30 aboriginal townships. Any subdivision of a county with a population over 100,000 is classified as a small city although two units, Ilan City and Hualien City, have retained their historical designation as small cities despite the fact that they have less than 100,000 inhabitants. To represent ( 5 )

6 -138- their degree of urbanization, I have classified five types of subdivision on basis of their population Size as follows: (1) Major cities with population 200,000 or more. (2) Small cities with population 100,000 to 199,999 (3) Small cities and urban towns with population 50,000 to 99,999. (4) Urban towns with population less than 50,000 (5) Rural townships Over the 14 years period, , the total population of Taiwan grew about fifty percent, from 9.4 million to fourteen million. Most of this increase has been due to the natural Increase of the Taiwanese. During this period there has been very little migration to or from Taiwan. In this sense, Taiwan is almost a closed population. The rapid increase of the Taiwanese population has been primarily the result of a high birth rate and a falling death rate. The birth rate fluctuated between 40 and 45 births per thousand up to During the same period, the death rate declined from about to about 5 per thousand in deaths per thousand in Since there is very little external migration in Taiwan, the increase of the population of working ages is determined by past fertility and mortality as they have formed the present age structure of the population, as well as by current mortality rate. The population of working ages in 1969 consisted of the people who were born prior to 1954 and still survived in The high rates of natural increase prior to 1954 and gradually declining sate of natural increase thereafter had increased the proportion of working age (above ages 15) from 56.3% in 1956 to 59% in Between 1956, and 1969 the labor force in Taiwan increased very rapidly from 2,684,034 to 4,919,687, an increase of 83%. Such rapid increase in labor force may depend on he growing industries providing many job opportunities and on the natural increase of working-age population. Now, let's examine whether the growing industries provided jobs for many members of the growing urban labor force by ( 6 )

7 -139- tracing the rates of population and labor force growth within these subdivisions in Taiwan. It turns out that the rate of population increase in Taiwan varies with the urbanization of each subdivision ( table 4). Table 4. Population and Labor Force Increases Within Each Type of Subdivision in Taiwan, Type of subdivision No. of units Population 0,000) Labor force %Change %Chang Major. cities with pop. 200,000 or more 5 1, , , Small cities and urban towns: a) Pop. 100,000 or more , , , b) Pop. 50,000 to 99, ,375 2, , , c) Pop. less than 50, ,491 2, , , Rural townships 234 4,028 5, ,182,7782,109, Taiwan as a whole 9,390 14, ,684,035 4,919,687 B3 The high rates of population increase in urban areas were due to the combined effect of a rate of natural increase and a continual flow of people from the rural areas to the cities. Since urbanization is a process of redistribution of population whereby the proportton urban increases, urbanization cart not occur in absence of migration under the typical urban-rural differential fertility, that is, a differential that favors the rural segment", The force of this growth trend may be explained as the extension of population and economic activity into "urban" 3 See, for example, D.l. BogUe and P.M. Hauser, "Population Distribution, Urbanism and Internal Mig.ratlon Proceedings of the Wor! Population Conference, Vol. IV. ( 7 )

8 -140- areas have proceeded at quite different rates among the subdivisions. If subdivision growth is measured in terms of employed labor force rather than population, almost exactly the same pattern emerges (see also table 4). Between 1956 and 1969 the greatest relative expansion took place in the major cities; the least in the rural townships. Shares of the national labor force compare quite closely with the population shares for all subdivision, the greatest deviation being in the rural townships which have been affected by high birth rates and a large proportion of children below working age. As a result of these differential rates of relatively increase within the subdivisions, throughout the period under review there has been a nation-wide decline in the proportion of population living in the rural areas and a great increase in urban population. For example, the proportion of poplation living in the major cities in 1956 was 19.7% which increased to 23.1% in The decline in the share of labor force engaged in resource activities (agricalture, forestry, mining and fishing) is traced in a later chapter, as are the increase in manufacturing and service employment. At present, it is necessary to further note the profound effect of migration on the urbanrural pattern of population and labor force. B. Net-Migration Rates.AJnong Each Subdivision The pattern of migration leading to urbanization can be traced by examining the average net-migration rate within each of the subdivision. By using a residual method and published measures of the population, births, and deaths for each subdivision, I have calculated this rate for each subdivision of Taiwan for the fourteen-year period. The following formula was used: Pa-P1-B-D M= x Pm ' M=Net migration rate (per year) Pa=Population at the end of the period P 1=Population at the beginning of the period ( 8 )

9 B=Births during the period D=Deaths during the period Pm=Population at the middle of the period The mean net-migration rate varies with the urbanization of the subdivision (see table 5). The major cities, small cities and urban towns with more than 50, 000 people had net in-migration, while the small urban towns and rural townships had net out-migration. Table 5. Average Annual Net-Migration Rates Per 1,000 Persons by Each Type of Subdivision in Taiwan, Type of subdivision Major cities with Pop. 200,000 or more Small cities and urban towns: a) Pop. 100,000 or more b) Pop.50,OOO to99,999 c) Pop. less than 50,000 Rural townships No. of units Net-migration rate (per 1000 per year) Much of the variation in migration rates within township groupings is related to the proportion of people employed in agriculture or fishing at the beginning of the period. In those townships with net inmigration rates, the net in-migration between 1956 and 1969 is negatively correlated with the percentage of the male labor force in 1956 who were employed in agricultre and fishing. The simple correlation coefficient is negative 0.6. This strongly suggests that the percentage of the male labor force engaged in agriculture and fishing is the single major variable related to the net-migration rate. And migration in Taiwan can be summarized as a flow from rural farming areas to urban nonfarming areas, which was supported by the analysis of net-migration rates of subdivision of the counties. ( 9 )

10 -142- C. Measure of Differential Grq...t... AlnOJlg Subdivisions of Taiwan by Applying T"'e Shift Tec"'nique No fully satisfactory way of combining percentage and absolute changes has yet been devised to measure differential labor force growth within each type of subdivision. However, by using a "shift" method of presenting data, it is possible to see the relative size of the gain or losses among the subdivisions being compared. Based on this method, we may compute the mobility of population, labor force and industry within the subdivisions. First, it is necessary to explain what is being measured when "shifts" are used to espress a change in a subdivision's relative standing. Growth in population will be taken as an example. Between 1956 and 1969 the population of Taiwan increased by 4,706 thousand. This represents a percetage increase over 1956 of 50%. Naturally, not all of the subdivisions grew at this national average rate. Some of them grew at higher rates than the nation's 50% higher-and some at lower rates. When all subdivision's deviation from expected growth are added together they amount to no more than 691 thousand; but it is the distribution of these 691 thousad among the subdivisions that provides the key to measuring changes in the subdivisions' relative standings as related to the growth of the nation as a whole. The national shift pattern, summarized in Table 6, shows how expected growth compares with actual growth and results in the total net shift figure for the nation. Table 6. Total Population, Absolute Change, and Net Shift in Taiwan, Type of subdivision Taiwan as a whole Total Pop. (1,000) Absolute Expected Net % change changes shift Shift , ±691 ±100.0 Major cities with Pop.2oo.000 or more , Small cities and urban towns: a) Pop or more b) Pop to c) Pop. less than Rural townships If all townships had the same growth rate. ( 10 )

11 -143- As can be seen from the tabulation, three urban subdivision (major cities and the following two subdivisions) have "extra" growth, or net upward shift in population. The rest, two rural subdivision, have downward shift. When this figure is compared to all the extra growth, it turns out that 67.7% of all the upward shifts experienced across the nation were toward the major cities. On the other hand, the rural townships alone account for 81.8% of downward shifts. Using the same process of shift analysis as has been applied, to the labor force of the subdivisions, we see that they follow the same shift pattern as the population (see table 7). However, the percentage of upward shift for the major cities and downward shift for the rural townships are higher than population's. The major cities alone accounted for 82.6% of the net upward shifts and the rural townships accounted for 91.3% of the net downward shifts. The basic explanation Table 7. Total Employment, Absolute Change, in Taiwan, and Net Shift T pe of subdivt ion Total employment Absolute "Expected" Net % y IS change change shift shift ~--~ Taiwan as a whole 2,684,035 4,019,687 2,235,652 2,235,652 ±63, Major cities with Pop.200,OOO or more 513, , , , , Small cities and urban townee a) Pop. 100,000 or more 179, , , , , b) Pop. 50,000 to 99, , , , , , c) Pop. less than 50, , , , ,978-5, Rural townships 1,182,778 2,109, , ,189-58, is that migration rates are highest for young adult age 15 to 35. The universality of this relationship was clearly established in Dorothy Thomas's review of the migration literature ( 11 )

12 -144- in 1938'. The migration rates by age fit this pattern in Taiwan. This conclusion was. reached by Alden Speare after a careful analysis of characteristics of migrants in Taiwan.! This pattern may be a key factor leading to a higher percentage of upward shifts for the labor force in the major cities and downward shifts for the labor force in the rural townships, as compared to the population. Since jobs seem as logical a starting place as shifts in population and labor force, this shift pattern of population and labor force has roughly suggested that the growing industries provided jobs for many members of the growing urban labor force in Taiwan. This conclusion also was further supported by Alden Speare who examined the characteristics of migrants from a sample of migration records. He found that migrants from rural and smaller urban areas to cities and larger urban areas were more likely to have completed junior school education (9 years) than the residents of the areas of origin. This finding leads him to conclude that the opportunity to obtain skilled or semi-skilled employment in the cities may be a more important factor in the decision to move than the rural hardship. CHANGES IN STRUCTURE OF THE LABOR FORCE Shifts in the labor force among the subdivisions in Taiwan between 1956 and 1969 would accompany shift in job distribution, simply because the urban structure of the labor force differs from the rural. For example, the proportion of persons engaged in nonagricultural industry in 1969 was about 90% in the cities against about 33% in the rural. The effect of this shift pattern of the labor force within the subdivisions described in the previous section can best be summarized by recording, in Table 8, the changes in broad patterns of the labor force between 1956 and Thomas Dorothy. Research 11rlemorandum on Migration Differentials. New York: Social Science Research Council, Bulletin NoA3 5. Alden Spear. Urbanization and Migrclion in Taiwan, Taiwan Population Studies Working Paper No.Ll, ( 12 )

13 -145- Table 8. Distribution of Total Employment in 3 Major Sectors As Defined by Clarks' Sectors Sector Employment -_.._ _ _ % 1969 % ~_Percentage increase Both sexes 2.684, , Primary 1,535, ,282, Secondary 386, , Tertiary 742, , N.A. 18, , Male ,697, Primary 1,218, , Secondary 331, , Tertiary 627, , N.A Female 490, ,222, Primary 326, !'i Secondary Tertiary , N.A. 2, Note: Prim.esagrlculture and mining; Sec.=manufacturing; Tertiary=all other During this period. the labor force in Taiwan grew about 83%, from more than 2.6 million to about 4.9 million. Naturally, along with Taiwan's economic growth, not all of the 3 major sectors grew at this national average rate. Among these 3 major sectors, the tertiary labor force grew fastest, followed by manufacturing sector and by the primary sector. For the male, the pattern of growth among these 3 sectors is almost the same as that for total employment. However, for the females, the manufacturing labor force grew fastest, followed by the tertiary sector and then by the primary sector. OWing to this large expansion of the tertiary sector, the structure of the labor force between 1956 and 1969 was changed. The proportion of persons engaged in the primary sectorworkers in farming, forestry, fishing and mining-declined from ( 13 )

14 ~ % to 46.4%. The proportion in manufacturing remained almost unchanged, about 14%. For the service labor force, the proportion rose markedly, from 27.7% to 39.3% over the whole period. It is worth noting that the increase in the male labor force was mainly absorbed in the large increase in tertiary activities. It included about one half of the male total employment in On the other hand, the proportion of female employment in manufacturing industries increased from 11.2% in 1956 to 14.6% in This may be due to the fact that many factories prefer to employ single girls because they are more dexterous than males and are Willing to Work for relatively lower wages. The high increase in the tertiary or service sector of the economy in Taiwan deserves speial attention and explanation. This sector of the economy has often been regarded as itself a key measure of economic development and material progress. As technical and organizational advances in primary (resource) and secondary (manufacturing) sectors have augmented labor productivity, a growing proportion of the labor force has been freed from resource extraction and manufactures to engage in so-called services to business and consumers-that is, in transportation and communications, wholesale and retail trade, finance, government, recreation, the professions, and other services to individuals. Because the service sector of the economy is commonly defined as "all other activities"-that is, as the total labor force less the workers engaged in primary and secondary activities-so many different types of activities are involved that generalizations as to their character and significance are subject to a considerable degree of error. It is well to bear this in mind when looking at the service activities in Table 8. Therefore, it seems that the shifts of the labor force from the rural areas to the urban areas accompanied the shifts of the job distributions. The changes in structure of the labor force in the decribed 3 major sectors have supported this idea. ( 14 )

15 CONCLUSION AND RESEARCH NEEDED A. COllclusion From the above analysis, we found that the increase in labor force participation rate between 1956 and 1969 in Taiwan was mainly due to the increases in age-specific activity rates, specially the females' age-specific activity rates. The changes in age structure in this period did not have much effect on this increase. In examining the shift pattern of the labor force among the five subdivisions of Taiwan and changes in structure of the labor force between 1956 and 1969, we found the industrialization in Taiwan providing an increased opportunity for nonagricultural employment in urban areas. This finding leads one to the conclusion that the opportunity to obtain' skilled or semi Skilled employment in the cities may be a more important factor in the decision to move than the rural hardship. The real increase in activity rate in the study period can be said to have arisen from the fact that the growing industries provided jobs for many members of the growing urban labor force. B. Research needs a) The male activity rates for the age groups (15-19, and 65 and more) were unusually low as compared with other countries. This is probably underreporting, and needs due to the further research. The decline in the male activity rate for ages from 70.1% in 1956 to 64.5% in 1969 may be due to the rise of educational level and the increase in the school population in this age group which also needs further study. b) Because of the considerable internal migration. which tends to be selective as to age and sex. the sex ratio (males per 100 females) and age composition among the subdivisions of Taiwan between 1956 and 1969 had been changed,(see tables 9 and 10). The sex ratio was positively correlated with degree of urbanization for The proportions of ( 15 )

16 -148- working population was consistently higher in 1969 than This proportion also was positively correlated with degree of urbanization in terms of the subdivisions. However, the crude activity rates was negatively correlated with degree of urbanization. should further studied. (see Teble 11). This also Table 9. Sex Ratio by Type of Subdivision in Taiwan, 1956 and 1969 Type of subdivision No. of units Major cities with Pop or more 5 Small cities and urban towns: a) Pop r more 6 b) Pop.50.00Q--99, c) Pop. less than Rural townships 234 Taiwan as whole lob Table 10. Age Composition by Type of Subdivision in Taiwan, 1956 and and over Major cities with pop or more 5 Small cities and urban towns: a) Pop or more 6 b) Pop c) Pop. less than Rural townships 234 Taiwan as whole B ( 16 )

17 Table 11. Crude Activity Rates Within Each Type of Subdivision in Taiwan, 1956 and Type of subdivision* Major cities (Population No. of units % Change 200,000 or more) Small cities snd urban towns: a) Pop. 100,000 or more b) Pop. 50,000 to 99, c) Pop. less than SO,OOO Rural townships _----~~_._ Taiwan as whole *based on Taiwan's administrative units and population size in 1969 Source: Same as Table 1. ( 17 )