Research

Income Inequality, Growth Inequality, and Redistribution in Taiwan, 2001-2017: Evidene from Distributional National Account

with Wei-Lun Lee, Ming-Jen Lin, and Yi-Chan Tsai 

Abstract:

This paper provides a comprehensive view of various inequality issues and evaluates the effects of redistribution by constructing the Distributional National Accounts of Taiwan. Much higher than previous estimates, Taiwan’s income inequality levels are similar to U.S. levels and are rising from 2001 to 2017. The top 10% pre-tax income share increased from 44% to 48%, mainly as a result of a surge in corporate retained earnings. The distribution of economic growth is even more unequal, with the top 10% growth share estimated to be 60%. Furthermore, the redistribution system in Taiwan is weak. Compared to the U.S. and France, the reduction of inequality measures is small. There is a limited amount of redistribution targeted at the low-income population, whereas most of the in-kind transfers go to the National Health Insurance program.

Contagion and Exposure in Financial Networks with Yao-Ren Kang

Exposure to the financial system has been considered to increase the extent of financial contagions. In contrast, we establish when can a high level of exposure achieves a diversified pattern of holdings, thus reducing the extent of contagion and failures. We demonstrate this result through an analytical example and random network simulations.