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

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.