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The policy “One Mandatory Day off and One Flexible Rest Day” was enacted on Dec. 23rd, 2016, and people in Taiwan officially enjoy two days off in every week. Various measures including: 1. Increasing overtime hourly rate in the holiday. 2. Including overtime hours into the monthly cap of total working hours. This policy received backlash from both employers and employees. While the employees complain about the decreasing salary due to less hours of works, the employers grumble about the increasing costs. Although this policy has been implemented for about two years, there is little empirical research on the effect of it. Moreover, for many workers, other than how many holidays they possess, they might pay more attention on the change in their monthly income due to the policy change. Therefore, this paper aims to study the effect of “One Mandatory Day off and One Flexible Rest Day” on the workers’ wages with difference-in-difference estimation. The treatment group is workers in accommodation and food services, and the control group is workers in the financial and insurance industry. Using Manpower Utilization Survey for 2016 and 2018 conducted by Directorate-General of Budget, Accounting and Statistics, Executive Yuan, this study finds that the policy actually increases the wage about 7.1% for the control group. Moreover, the policy has the largest impact on the small firms which employs less than fifty workers. For the workers who work in the firm employing 1-9 workers, they receive the lowest average salary but enjoy the highest wage increase with the implementation of the policy. Lastly, the policy has positive effects on all parts of Taiwan: north, central, or south. |