A DYNAMIC DEMAND-SUPPLY MODEL FOR ELEMENTARY SCHOOL TEACHERS IN TAIWAN

190 International Journal of Electronic Business Management, Vol. 7, No. 3, pp. 190-200 (2009) A DYNAMIC DEMAND-SUPPLY MODEL FOR ELEMENTARY SCHOOL TEACHERS IN TAIWAN Chih-Tung Hsiao 1, Hui-Ling Peng 2* and Bruce Chien-Yuh Lee 3 1 Department of Economics Tunghai University Taichung (40704), Taiwan 2 Management College Da-Yeh University Changhua (51591), Taiwan 3 Department of International Trade and Finance Fu Jen Catholic University Hsinchuang (24205), Taiwan ABSTRACT The Ministry of Education needs to exercise long-term planning and control over teacher human resources. Teacher education policies determine teacher quality and affect the quality of education, which in turn weakens the national competitive edge. If teacher education policies change, a series of dynamic effects takes place. The supply and demand for Taiwan elementary school in particular, while being governed by other factors such as teacher education policies, government budgets, education reform, and birthrates, is contingent on the long-term planning and stability of teacher labor force, and is therefore a problem worthy of investigation. This study analyzes the history of teacher education, birthrates, and the excess supply of elementary school. System dynamics is used as a methodology, proceeding from the perspective of system thinking to investigating the structure of the Taiwan elementary school teacher demand-supply system. A dynamic model is presented to explicate how the system operates. The System Dynamics model is also used to implement trend simulation for government policy making. The implications of this model are also discussed. Keywords: System Dynamics, Dynamic Simulation, Teacher Demand-Supply, Elementary Schools * 1. INTRODUCTION In formulating labor resource strategies, management departments usually need to do long-term, dynamic planning and consider balanced growth. Elementary schools are the cradles of basic knowledge transmission and knowledge creation for the citizens of the nation. The long-term, stable, and balanced growth of teacher labor resources is inseparably tied to the quality and effective implementation of fundamental education. Without proper planning and control, a disequilibrium in supply and demand for teacher resources will occur, ultimately leading to the waste of labor resources [5,21]. In recent years, the disequilibrium in supply and demand for elementary school in Taiwan has become more and more serious [14]. Teacher education policies determine the quality of, consequently determine the quality of * Corresponding author: amy@mail.dyu.edu.tw education, the success of national education, and thus deeply affect the future competitiveness of the nation [54]. Furthermore, when there are changes made to government education policies, a chain of dynamic effects is the result [28]. In 1994, changes were made in the education policy of middle and elementary school in Taiwan. The Education Department modified the Teacher Education Law, allowing normal universities to institute courses in education. Teacher education thus developed from a unilateral approach to a multilateral approach [48]. However, education management authorities did not exert strict control over the supply and demand of, blindly opening up education mechanisms. In doing so, they planted the seeds that led to the supply of elementary school greatly exceeding demand later on. As a result, the social problem of reserve being unable to find work exploded in 2002 [5,14,53], creating a long-term and serious disequilibrium in teacher supply and demand.

C. T. Hsiao et al.: A Dynamic Demand-Supply Model for Elementary School Teachers in Taiwan 191 As Taiwan society has changed, the trend towards having fewer children has led to reductions in demand for, in turn influencing teacher structure [50]. Annual population increase by birth in the Taiwan region went from 329,581 in 1995 to 204,414 in 2007 [15], a drop of approximately 37%. The trend towards having fewer children directly impacts the demand for elementary school. In order to avoid having excess from reducing number of, most schools have chosen to hire substitute. A drop in teacher quality and corresponding effect on instruction quality has resulted [4]. The budget deficit situations of Taiwan government also directly affect the demand-supply equilibrium for [56]. The budget of the government has deteriorated consistently in recent years. Education budget allocations have not met legal regulations; there have been serious shortages in education funds. Decisions on the number of new hired and the number of retiring have been affected [7,8]. We take the year 2006 as an example. In 2006, actual education funds provided by local governments totaled $320 billion NT, of which $265.9 billion NT was used for teacher salaries and benefits as well as retirement pensions, or a proportion of approximately 83%. Local governments faced an even direr situation. In the same year, education funds in Taipei County totaled $3.4 billion NT, of which $3.06 billion NT was used for teacher salaries, benefits, and retirement pensions, a proportion of 90% [13]. These figures show that there is a serious shortage of funds for elementary schools in Taiwan. In addition, there is an urgent problem of labor costs imposing limits in using education funds. In recent decades, the Taiwanese government has strongly promoted educational reform. Reform proposals have not been extensive enough and have not addressed the fundamentals of education problems; policies and curriculum have been changed too quickly, causing senior to apply for retirement early [44]. The retirement pensions caused by mass retirements have become the most serious burden on local governments [45]. Education budgets are unable to support teacher retirement pensions, causing current to desire to retire but not be able to. At the same time, without an influx of new, teacher metabolism has slowed and the reserve teacher problem has become more serious, causing problems such as gaps in teaching experience and the waste of teacher labor resources; the future development of elementary schools is directly affected [24,52]. It can be seen from the above description that the supply and demand for elementary school in Taiwan is influenced by various factors, including teacher education policies, number of births in the population, government budget, and educational reforms. This issue is tied to the long-term planning and balance of teacher labor resources and is a problem worthy of study. This study will analyze the development of teacher education, the number of new births, and the excessive supply of elementary school. System dynamics are used as a methodology to holistically investigate the structure of the demand-supply system for elementary school in Taiwan, allowing us to increase our understanding of Taiwan elementary school teacher human resources. The result and implication of the model are discussed. 2. LITERATURE REVIEW 2.1 History of the Development of Taiwan Elementary Education Policies The development of Taiwan elementary education policies finds its roots in teacher education system of the Mainland era and in the educational policies of the following Japanese occupation period. The details of implementing citizen education were clearly laid out when the Citizen Education Law was announced in 1979. The 1994 Teacher Education Law established a legal basis for multilateral teacher education policies, affecting the transformation and development of domestic teacher education and directly impacting the supply of elementary school. The Instructor Law of 1995 set forth teacher organizations, rights, duties, and professional development functions. Course outlines were announced in 1998. The Education Fundamentals Law of 1999 laid out the four primary principles of education implementation. In 2000, the Education Funds Provisioning and Management Law provided for six legal orders dealing with the allocation of education funds at various levels of government [20,34,35]. Literature dealing with Taiwan national education policies includes research on trend of education policy, how to increase execution of policies, national education policies over twelve years, as well as other subjects [9,30,39,57]. It can be seen from the development of Taiwan elementary education policies of the past 90 years that policies lack continuity as well as adequate measures and overall considerations, leading to instability in the education system; are discomfited, reserve find it difficult to obtain employment, and serious disequilibrium in teacher demand-supply results [49]. 2.2 History of Elementary School Teacher Education From a holistic perspective, the development of elementary school in Taiwan can be divided into four different periods: 1920-1967, 1968-1978,

192 International Journal of Electronic Business Management, Vol. 7, No. 3 (2009) 1979-1993, and post-1994 [55]. A teacher s school was established during the Japanese occupation around 1920 and national education was extended from six years to nine years in 1968, laying the foundation for national education. Between the passing of the Teacher Education Law in 1979 and the year 1994, the supply and demand for middle school and elementary school in the Taiwan were cultivated and planned by central education management authorities. With the passage of the Teacher Education Law in 1994, the previously unilateral and closed system managed by academies was transformed into an open, multilateral system. Different universities established education programs for cultivating, opening the way for teacher education to move towards multilateralism [48]. The number of teacher education schools increased from 13 schools in 1995 to 74 schools in 2004; 88 education programs were established, including 50 middle-level education programs, 21 elementary education programs, 14 kindergarten education programs, and 3 middle-school special education programs [27]. Teachers schools and university education programs produced 10,789 prospective in 1995; 71,629 prospective were produced by June 2006 [14]. As of June 2008, the number of elementary school in reserve stood at 48,774. It can be seen that teacher education policies are not appropriate for actual needs, leading to disputes over the lack of employment openings for reserve and the waste of teacher education resources [36]. Literature dealing with elementary school teacher labor resources includes material on policies and vision for the education of middle and elementary school, teacher quality control mechanisms, and other subjects [2,3,10,29,54]. 2.3 New Birth Population Statistics The number of new births in Taiwan has seen a distinct decrease, leading to a corresponding decrease in the demand for [4]. New births have dropped consistently over the years; there were 325,545 new births in 1996, 271,450 in 1998, 305,312 in 2000, 216,419 in 2004, 204,414 in 2007 [15], an overall decrease of roughly 37%. The year 2000 was the dragon year in the Chinese lunar calendar; the number of new births rising past 300,000 rather than dropping was an anomaly. The decrease in the number of new births in subsequent years shows that the trend towards having fewer children is impacting the number of new births. 2.4 Oversupply of Elementary School Teachers in Taiwan from 2006 to 2010 According to the Ministry of Education statistics, the number of elementary school students decreased by 19,717 in 2006, or roughly 881. In the same year, there were 1,353 extra ; after subtracting retiring, the annual demand for was 857 people. In 2007, the number of elementary school students decreased by 44,575, or 1,621 ; there was an oversupply of 2,461. The Department of Education estimates that the number of elementary school students will decrease by 67,821, or 2,232 ; there will be an annual teacher oversupply of 3,444. From 2006 to 2010, the number of elementary students will decrease by a total of 282,542 students, or 9,686 ; there will be an oversupply of 14,782 [14], as shown in Table 1. It can be seen the teacher supply-demand balance is directly affected by policies, including teacher education policies, population increase by births, the legally required number of students in each class, and class-teacher proportion policies [46,51]. Table 1: Oversupply of Taiwan elementary school from 2006-2010 Year 2006 2007 2008 2009* 2010* (2000-2006) (2001-2007) (2002-2008) (2003-2009) (2004-2010) Students -19,717-44,575-69,249-81,180-67,821-282,542 Classes -881-1621 -2329-2623 -2232-9686 Annual Teacher Oversupply Note: * denotes department of education estimate Accumulated Number 1,353 2,461 3,544 3,980 3,444 14,782 3. SYSTEM DYNAMICS 3.1 Development of System Dynamics The system dynamics was founded in 1950 by Jay W. Forrester, a professor at Sloan Management School of the Massachusetts Institute of Technology. Forrester published his work Industrial Dynamics in 1961 [18], applying feedback control theory industrial systems to establish a management model. In 1969 and 1971 respectively, Forrester applied system dynamics to the urban level (Urban Dynamics) and to the worldwide level (World Dynamics) [19]. Meadows and others published The Limits to Growth in 1972, using system dynamics approach to investigate the interactions between worldwide population growth and economic development as well as the use of environmental resources [33]. In 1980, Forrester presented a National Economy model, a departure from traditional econometrics models, to the Journal of

C. T. Hsiao et al.: A Dynamic Demand-Supply Model for Elementary School Teachers in Taiwan 193 American Statistical Association. Sterman applied system dynamics in 1988 to create a predictive model for American power demands [41]. Senge (1990) expanded system dynamics to organization studies in The Fifth Discipline [38], gaining attention in both academic and business circles. In defining system dynamics, Forrester (1961) believed that the investigation of the information-feedback characteristics of [managed] systems and the use of models for the design of improved organizational form and guiding policy [18]. Three factors greatly influence system results: system structure, time delay, and government policy. Wolstenholme (1990) suggested that A rigorous method for qualitative description, exploration and analysis of complex systems in terms of their processes, information, organizational boundaries and strategies; which facilitates quantitative simulation modeling and analysis for the design of system structure and behavior [47]. Coyle (1996) defined system dynamics as A method of analyzing problems in which time is an important factor, and which involve the study of how the system can be defended against, or made to benefit from, the shocks which fall upon it from the outside world [11]. System dynamics is a methodology of studying and managing complex feedback systems, emphasizing holistic and macroscopic considerations of the system. System thinking is used to understand the components and interactions between the components within the system. Computer simulations are used to show how relationships between organizational structure, government policies, and delay affect the development and stability of the overall system, increasing our understanding of the nature of complex problems. The ultimate purpose is not in predicting the occurrence of events, but in thinking deeply about the operations and underlying nature of the system in order to achieve the purposes of system management. In summary, system dynamics is a management laboratory. In using this laboratory, policymakers can test different situations changes in structure or management, using computer-simulated results as an important reference for policy decisions. 3.2 Application of System Dynamics Application of system dynamics has expanded from the field of industry to the social sciences, including management functions, organization strategy [40], industry development [26], macroeconomics [17], and applications at the world development. In addition, many scholars continue to contribute relevant studies using system dynamics methodology, including system dynamics concepts and theorem, problems with pattern construction [25], industry development [6], pattern effectiveness [41], public sanitation issues [20,23,43], enterprise strategy management [1,16,32], investigations on the development of electronic government [22], studies on elementary education [24,31,37,43], etc. Consequently, system dynamics has become a mature methodology after half a century of development. 4. MODELING Taiwan elementary schools face the problem of serious disequilibrium in supply and demand of. In both domestic and foreign literature, few have made use of system dynamics to construct a demand-supply model for elementary school. Consequently, this study will analyze the operations of the Taiwan elementary school teacher demand-supply system as well as explain the cause-and-effect relationship between relevant variables from a perspective of system thinking. The number of school-age children and average class sizes are used to decide the increase in the number of, while the number of graduating from elementary schools is used to decide the reduction in the number of. Multiplying the number of by the number of assigned to each class gives the total demand for. Except for Taipei City, which assigns 1.7 to each class, all cities and counties assign 1.5 to each class. Adding the number of currently employed to the total number of needed gives the total demand for, or the annual demand for. The dynamic flowchart is shown as in Figure 1. Accumulated number of demanded graduating Total demand Decrease in number of Average class size assigned per class school-age children Increase in number of new births Figure 1: Dynamic flowchart of total demand for teacher labor and number of If the current supply of is excessive then there is no annual demand for new. Currently, excess are dealt with by temporarily assigning them to a school to await openings. If there are openings, then annual teacher demand is produced. There are two strategies that can be used: the first strategy is to use substitute to resolve annual teacher demand; the second is to hire new, holding tryouts and selections for in cities and counties, thereby increasing the number of and, over time, increasing the number of waiting for retirement. When the number of waiting for retirement increases, the number of

194 International Journal of Electronic Business Management, Vol. 7, No. 3 (2009) retirees also increases. The annual number of retirees is affected by the retirement approval ratio. When the number of retirees increases, then the number of correspondingly decreases. Figure 2 is a dynamic flowchart depicting the number of. retiring retirement approval rate awaiting retirement Decrease in demanded Increase in newly hired Total demand Annual teacher demand Figure 2: Dynamic flowchart depicting the number of substitute The sources of teacher supply include education program students, postgraduate students, and teaching academy students. The difference between annual teacher supply and newly hired is referred to as reserve. From 2002 onward, the oversupply of has led to large numbers of reserve, not only repeatedly setting new records for admission rates in teacher tryouts, but also wasting educational resources used on teacher education. Figure 3 is a dynamic flowchart showing reserve. newly hired Annual ratio of newly hired Decrease in reserve Teacher oversupply Accumulated reserve Teaching program students Increase in reserve Postgraduate Annual teacher supply Figure 3: Dynamic flowchart depicting the number of reserve Teaching academy students In summarizing the descriptions of models described above, this study presents a system dynamic model for Taiwan elementary school teacher demand-supply. As shown in Figure 4, this model is composed of three level variables or stocks: the number of, the number of, and the number of reserve. The overall structure includes time delay as well as complex and dynamic relationships. retiring retirement approval rate Annual ratio of newly hired Decrease in reserve awaiting retirement Decrease in newly hired Accumulated reserve Teacher oversupply Annual teacher demand Increase in reserve demanded Increase in substitute Total demand Annual teacher supply Teaching academy students Decrease in number of graduating Postgraduate assigned per class Average class size new births Teaching program students Increase in number of school-age children Figure 4: System dynamics approach to the teacher demand-supply of elementary school in Taiwan 5. RESULT AND DISCUSSION This study used VENSIM software to perform trend simulation and test sensitivity for each important variable in the Taiwan elementary school teacher demand-supply dynamics model, including number of, annual teacher demand, annual reserve teacher supply, annual number of retiring, etc. As a retirement fund was established in 1996, educational reforms began to impact teacher labor and the educational funding system. This study deals with those who will become elementary school this year, 2008. We hypothesize their ages at 25, and if future retirement policies require teacher age added to employment time to be greater than 85, then their years of service will exceed 30 years; they will retire in 2038. Hence, this study sets the period of simulation from 1996 to 2040. 5.1 Result (1) Simulation for number of The increase or decrease in the number of lies in the difference between the change in the number of new first grade and the change in the number of graduating. Currently, the legal maximum number of students per class is 32. The simulation diagram for the number of shows that the number of new births dropped from 305,000 in 2000 to 205,854 in 2005. Because of the six year lag time, the number of then drops rapidly. The 12-year period from 2005 to 2017 is the period in which the

C. T. Hsiao et al.: A Dynamic Demand-Supply Model for Elementary School Teachers in Taiwan 195 number of as well as the demand for sees the greatest drop; it is also the time when there is the greatest oversupply of. The situation gradually stabilizes starting in 2018, as shown in Figure 5. This simulated value closely matches historical trends and are consistent with expert examination. (2) Trends of teacher demand As shown in Figure 6, teacher demand trends, the first surge of annual teacher demand was in 1998 and the second in 2007. Thereafter, starting from 2008, teacher demand drops in a linear fashion. Excess are produced in 2013; the situation is most serious in 2015, in which 1,665 excess are produced. There is no demand for before 2017. In facing the problem of excess in the future, local governments are currently responding by hiring substitute. However, this policy cannot solve the problem. The legal maximum number of students per class should be reduced or the number of assigned to each class increased to solve the serious problem of excess. The number of Historical Simulated 80000 60000 40000 20000 0 1996 2000 2004 2008 2012 2016 2020 2024 2028 2032 2036 2040 Year Figure 5: Simulation result: Compare with historical data Figure 6: The number of teacher demand simulated (3) Trends of reserve teacher supply Affected by the trend towards fewer children, the school-age population drops sharply, leading to a shocking reduction of teacher demand. Although education policies are decreasing the number of supplied, Figure 7, the chart depicting reserve, shows that there will be as many as 76,000 reserve by the year 2017. Because policies are slow to adjust, the oversupply of reserve is very serious. (4) Trends of retirement The number of retired shows a trend towards growth, reaching its peak in 2030 with an estimated 87,868 people. Thereafter, there is a decreasing trend, as shown in Figure 8. It can be seen that the government will face a vast burden in teacher retirement pensions, possibly impacting the entire elementary school system given current circumstances. With the government operating at a deficit, if effective measures in balancing elementary education finances and planning labor resources are not presented, then there will be a financial crisis for the system. The historical data and simulation values in Figures 5 and 6 match closely. Three experts who examined the dynamic model and trend simulations of this study felt that this study possesses considerable validity and explaining power. 5.2 Discussion The demand-supply system for elementary school in Taiwan is affected by the trend towards fewer births in the population, the overall socio-economic environment, government finances, teacher education policies, and other factors. Of these, the impact of the trend towards having fewer children affects the structure of the entire teacher demand-supply system, the survival of the education industry as well as the economic development of the nation as a whole. In responding to this change, the government needs to set down responsive policies. Women should be encouraged to have children. The government can propose specific measures regarding child nurturing, employment, family issues, and other

196 International Journal of Electronic Business Management, Vol. 7, No. 3 (2009) aspects. Tax cuts or increasing tax breaks, flexible working hours, maternal leave, and other policies can be used to encourage women to raise birthrates. In addition, the metabolism of teacher labor resources and teaching quality should also need to be considered. The legal maximum number of students per class should be adjusted; appropriately increasing the number of assigned to each class can also be considered. In addition to resolving the problem of excess, an appropriate number of openings for the selection of should be provided in order to stimulate positive cycling of and to encourage qualified young people to choose schooling at academies. Also, with regard to teacher education policies, a lack of good policies and planning has led to an excess of reserve, wasting labor resources and causing a decline in the quality of. The Education Department must reexamine current teacher education policies, establishing reasonable and complete teacher evaluation policies, helping to improve the professional quality of. Overall, the government views the issues of the reduction of class and teacher numbers because of fewer children, the excess of reserve, and the hiring of full-time and substitute as separate problems. In reality, each of these issues is inseparably connected to the others, affecting the operation of the elementary school teacher labor resource system. The operation of the overall system dynamics must be considered holistically in order to form appropriate policies. 79000 Teacher Demand R eality Sim ulation 69000 59000 49000 39000 29000 19000 9000-1 00 0 19962000 2004 2008 2012 2016 2020202420282032 2036 2040 Year Figure 7: The reserve simulated Figure 8: The number of retired simulated 6. CONCLUSION AND APPLICATION The supply and demand of elementary school in Taiwan is a complex and dynamic system. This study utilized system dynamics to analyze the interactions between the structure of teacher demand-supply and environmental factors, proposing a dynamic demand-supply model for Taiwan elementary school. In this model, the three level variables of number of, reserve, and number of formed a complex and dynamic structure. It was found that the disequilibrium in teacher demand-supply was impacted not only by changes in education policy, but also by socio-economic factors, such as the decline in birthrates and government budget deficit, causing the teacher demand-supply disequilibrium to worsen. The problem of having excess due to demand-supply disequilibrium will take more than ten years to resolve as supply and demand gradually stabilize. Whether or not the government s long-term budget is sufficient for providing adequate support is a serious issue. The authors believe that elementary education is an important and long-term topic; the establishment of a decision-making support system for teacher demand-supply is urgently needed in order to provide long-term and holistic control over education budget planning, teacher demand-supply, education development, and the promotion of policies. This study differed from past literature in that this study presented a dynamic model for

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C. T. Hsiao et al.: A Dynamic Demand-Supply Model for Elementary School Teachers in Taiwan 199 ABOUT THE AUTHORS Chih-Tung Hsiao is an assistant professor in Department of Economics at Tunghai University in Taiwan. He received his master degree in Industrial Economics from National Central University and he had a Ph.D. degree in management science from National Chiao Tung University in Taiwan. His primary research interests include education policy, health economics, industrial economics, technology management and systems approaches. He has published in journals such as Journal of the Operational Research Society, Total Quality Management & Business Excellence, BMC Health Service Research, and Journal of the Chinese Statistical Association. Hui-Ling Peng is a Ph.D. candidate in Management College at Da-Yeh University, Taiwan and also a system manager of Computer Center at Da-Yeh University. Her major research interests include System Dynamics, systems approaches and decision-making management. Bruce Chien-Yuh Lee is an assistant professor in International Trade and Finance Department at Fu Jen Catholic University in Taiwan. He had been the sales manager of Exxon Corporation Taiwan Branch. From National Chiao Tung University in Taiwan, he received his Ph.D. degree in management science. His primary research interests include electronic commerce, marketing channel, international marketing and innovation management. His research appears in International Marketing Review, Total Quality Management and Business Excellence, International Journal of Electronic Business Management, Australasian Marketing Journal, Journal of Retailing and Consumer Services, Tourism Management and International Journal of Revenue Management. (Received December 2008, revised March 2009, accepted April 2009)

200 International Journal of Electronic Business Management, Vol. 7, No. 3 (2009) 台灣小學師資供需趨勢動態模擬之研究蕭志同 1 彭惠苓 2* 3 李建裕 1 東海大學經濟學系台中市西屯區台中港路三段 181 號 2 大葉大學管理學院博士生彰化縣大村鄉學府路 168 號 3 輔仁大學國際貿易與金融學系台北縣新莊市中正路 510 號摘要教育部門對教師人力資源政策須作長期的規劃與控制, 師資培育政策決定師資素質, 關係到教育品質的優劣, 直接影響國家競爭力因此當師資培育政策改變時, 將引發一連串動態的波動台灣小學師資供需, 受到師資培育政策出生人口數政府財政能力及教育改革等種種因素的影響此攸關師資人力長期的規劃與平衡, 是值得探討的問題首先, 本研究分析師資培育發展歷程新生兒出生數及小學師資超額供給等現況, 運用系統動態學為方法論, 以系統思考的觀點探討台灣小學師資供需系統結構, 提出動態模型解釋其行為現象, 以增加對台灣小學師資供需系統之瞭解, 透過動態模式進行趨勢模擬, 可作為教育當局制定政策與學術界研究之參考, 以期對台灣小學教育長期發展有所助益關鍵詞 : 系統動態學動態模擬師資供需國民小學 (* 聯絡人 :amy@mail.dyu.edu.tw)