This paper, using Taiwan as a case study, shows that an increase in outsourcing ratio can increase the number of skilled workers employed, but decrease that of unskilled workers. However, it has insignificant impact on Taiwan’s employment as a whole. Similarly, R&D also has the effect of shifting Taiwan’s employment structure toward skilled workers without significantly affecting the total number of workers employed. In addition, this paper shows that after controlling for other factors, Taiwanese firms investing in China increase their employment of skilled workers but has no effect on that of unskilled workers. As a result, the total number of workers employed increases.