Research

Income Inequality and Dynamics in Taiwan 

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

(Accepted by Journal of Macroeconomics)

Abstract:

This paper analyzes earnings, capital income, and total income inequality in Taiwan from 2004 to 2020 using administrative tax records harmonized within the Global Repository of Income Dynamics (GRID). Earnings inequality declined substantially for both men and women, driven mainly by faster growth in the lower half of the distribution. A demographic decomposition shows that this decline reflects compression within gender–age groups rather than changes in workforce composition. Percentile-specific reduced-form estimates indicate that real minimum wage growth is most strongly associated with earnings growth around the 10th–30th percentiles. The dispersion of earnings growth declined over time, while mobility remained substantial, particularly among initially low earners. Capital income was much more concentrated than earnings and substantially widened the upper tail of the total income distribution. Because earnings remain the dominant income source for most working-age individuals, total income inequality reflected the trend of earnings inequality and declined over the sample period.

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.