What is the impact of the U.S. export control reform act on the semiconductor industry? evidence from a quasi-experimental analysis of Taiwanese wages

Wen-Cheng Lin () and Yi-Ying Linda Yu ()

International Journal of Innovative Research and Scientific Studies, 2025, vol. 8, issue 5, 1522-1535

Abstract: This study examines the impact of the 2018 U.S. Export Control Reform Act (ECRA) on the labor market of Taiwan’s semiconductor industry, aiming to assess how geopolitically driven export regulations affect wage structures in allied high-tech economies. Drawing on nationally representative data from Taiwan’s Manpower Utilization Survey (2012–2023), the study employs a difference-in-differences method to estimate wage changes for workers in the electronic components manufacturing industry compared to a control group in the utility industry. The estimation is conducted using both ordinary least squares and median regression models. The results show that, after the enactment of ECRA, average wages in the treatment group rose significantly by 6–9%, with consistent findings across model specifications. A placebo test confirms that the wage effect is confined to manufacturing industries with high chip dependency and that no significant impact is observed in the service sector. Further analysis reveals that semiconductor trade flows also affect wages: imports from the United States are positively associated with wage increases, while imports from China have an adverse effect. The findings demonstrate that export controls, while designed as geopolitical instruments, yield tangible economic effects in allied labor markets. The observed wage shifts reflect evolving labor demand driven by supply chain restructuring, trade diversion, and localization incentives. ECRA has altered wage structures within high-tech manufacturing, providing new empirical insights for cross-disciplinary academic and policy debates on the consequences of security-oriented trade regulation on domestic labor.

Keywords: Difference-in-differences; Digital coalitions; Export control reform act; Semiconductor industry. (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:aac:ijirss:v:8:y:2025:i:5:p:1522-1535:id:9173

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