MARKET-STRUCTURE AND INTERINDUSTRY WAGE DIFFERENCES IN TAIWAN - TESTING THE DUALISTIC STRUCTURE HYPOTHESIS

Given Taiwan's high degree of openness and labor-intensive mode of pro duction, this paper uses export/sales ratio and K/L ratio to investiga te if there exists a dualistic structure (1) between the export-orient ed and domestic-oriented industries, (2) between the capital-intensive and labor-intensive industries. It is shown that the dualistic struct ure existed under such a classification (meaning that these different industry sectors have distinct patterns of structure and performance), and that K/L ratio is a better criterion to illustrate this feature. When analyzing inter-industry wage differences in a small open develop ing economy, this dualistic structure is an important factor to take i nto account. Using Taiwan's 1986 manufacturing sector (160 industries, 4-digit level) census data, regression results suggest that three var iables are negatively correlated to wage rates: industrial concentrati on ratio, female ratio, domestic/sales ratio. On the other hand, staff ratio and K/L ratio are positively contributed to wage differences; o utput/labor ratio and profitability of industries are unrelated to wag e differentials. Although there exists such a dualistic phenomenon in different sectors (export vs. domestic, capital-intensive vs. labor-in tensive), the determinations of wage differences among these sectors d o not show different patterns.