Industry-specific human capital and wage determination in Taiwan

The role of human capital in determining a worker's earnings across cohorts and gender, with particular emphasis on specific human capital, is investigated in this paper by studying labour market adjustment during the period of Taiwan's economic development. Empirically, it was found that a worker's earnings in Taiwan were raised most effectively by accumulating human capital through educational achievement and that this was particularly true for cohorts born after World War II. Second, the relationship between human capital and earnings varies substantially between genders. In determining wages, the order of relative importance of various types of human capital for the two sexes may be summarized as follows: Education and general labour market experience for female workers; and education, firm-specific, general labour market experience, and industry-specific for male workers. Since this result indicates that the issue of least importance in raising workers' earnings is industry-specific human capital, it is concluded that workers' skills can largely be carried over to new jobs. This finding may explain the remarkable level of labour reallocation among industries during Taiwan's economic take-off period.