I. Objectives of the Study Taiwan is poorly endowed with natural resources. It lacks fuel and metals. There are only 918,000 hectares of cultivated land, which have to be shared by the agricultural population of 5,638,000.1 Its main resource is the ample supply of relatively cheap and well-disciplined labor, which has been the major source contributing to its rapid industrialization and economic growth during the postwar period.2 Questions are now being raised as to how long this trend of rapid growth will last.3 As the economy continues to grow and capital formation remains at high rates,4 demand for labor will continue to increase. Unless the supply of labor remains elastic as in the past, a labor shortage will develop and real wages will begin to rise at an increasing rate. If so, the competitiveness of Taiwan's exports would weaken, and consequently its economic development would have to slow down. As in other developing countries, the existing unemployment statistics in Taiwan provide only a partial picture of the true laborutilization problem. Other than the measure of "open involuntary unemployment," it is equally, if not more, important to have measures of