Research

Income Inequality and Dynamics in Taiwan

with Kuan-Min Chen, Yu-Ting Chiang, and Ming-Jen Lin

Abstract:

This paper analyzes earnings and total income inequality in Taiwan from 2004 to 2020 using administrative income tax data as part of the Global Repository of Income Dynamics (GRID). We find that earnings inequality declined for both men and women, mainly due to rapid growth among low-income workers, with women at the bottom experiencing the strongest gains. The P90–P10 gap and Gini coefficient narrowed, while residual earnings dynamics exhibited rising skewness and kurtosis. Dispersions and skewness decrease with age and exhibit a U-shape alone income percentiles, while kurtosis increases with age and shows a hump shape alone income percentiles, peaking around P80. These dynamic patterns closely resemble other GRID countries. Total income inequality, though higher in levels, also declined, reflecting falling labor earnings inequality and stagnant or falling top capital incomes.

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.