Advances in Management and Applied Economics

An Empirical Study of the Backward-Bending Labor Supply Curve of Older Workers in Taiwan: Long-Term Data Analysis from 1978 to 2023

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• Abstract

   

  This study investigates the existence of a backward-bending labor supply curve among older workers in Taiwan, utilizing an extensive longitudinal dataset spanning 46 years (1978–2023). Employing weekly working hours of individuals aged 65 and above as the primary metric, we construct a quadratic empirical model to capture nonlinear wage effects while controlling for demographic characteristics, household structure, and regional fixed effects. Our primary findings indicate that while a nonlinear relationship is statistically present, the criteria for a theoretically consistent "backward-bending" phenomenon are not met in the main model across the observed period. However, robustness checks utilizing the logarithm of wages reveal a significant backward-bending trend in 43 out of 46 years, suggesting that model specification and wage distribution play a pivotal role in empirical outcomes. These results imply that the labor supply behavior of older workers is highly sensitive to functional forms, highlighting the shifting balance between substitution and income effects in an aging economy.

   

  JEL classification numbers: J14, J22, J31, C21.

  Keywords: Older workers, Backward-bending labor supply, Taiwan, Long-term data analysis, Wage elasticity.