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Wage Inequality and Returns to Skill in Taiwan, 1978-96

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  • Chun-Hung Lin
  • Peter Orazem

Abstract

Since 1980, income inequality has risen faster in Taiwan than in the United States. Inequality rose despite a rapid increase in the share of educated workers in the labour market that might have been expected to depress returns to education. Returns to a college education rose in Taiwan for all but the least experienced college graduates who were the most substitutable by the large new cohorts of college graduates. This pattern of changes in relative employment and relative wages is consistent with persistent shifts in relative demand toward skilled labour. The shifts are not sector-specific as might have been the case if shifts in trade flows were responsible for the shifts in relative wages. Growth of relative employment of more-educated workers occurred in all sectors of the economy, consistent with the hypothesis of skill-biased technical change. These results are similar to findings reported for OECD countries, suggesting that Taiwan has been exposed to the same types of skill-biased shifts in relative labour demand as in Europe and North America.

Suggested Citation

  • Chun-Hung Lin & Peter Orazem, 2003. "Wage Inequality and Returns to Skill in Taiwan, 1978-96," Journal of Development Studies, Taylor & Francis Journals, vol. 39(5), pages 89-108.
    • Handle: RePEc:taf:jdevst:v:39:y:2003:i:5:p:89-108
    DOI: 10.1080/00220380412331333159
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    1. repec:ebl:ecbull:v:10:y:2007:i:15:p:1-11 is not listed on IDEAS
    2. Anthony Stair, 2007. "Marital Wage Premium or Ability Selection? The Case of Taiwan 1979-2003," Economics Bulletin, AccessEcon, vol. 10(15), pages 1-11.
    3. Keng, Shao-Hsun & Lin, Chun-Hung A. & Orazem, Peter, 2014. "Why rapidly expanding the number of college-trained workers may not lower income inequality: the curious case of Taiwan, 1978-2011," ISU General Staff Papers 201412210800001032, Iowa State University, Department of Economics.
    4. Yih-chyi Chuang and Wei-wen Lai, 2017. "Returns to Human Capital and Wage Inequality: The Case of Taiwan," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(3), pages 61-88, September.
    5. Yu-Chen Kuo, 2008. "Wage Inequality and Propensity to Marry after 1980 in Taiwan," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 7(3), pages 231-248, December.
    6. Shao-Hsun Keng & Chun-Hung Lin & Peter F. Orazem, 2017. "Expanding College Access in Taiwan, 1978-2014: Effects on Graduate Quality and Income Inequality," Journal of Human Capital, University of Chicago Press, vol. 11(1), pages 1-34.

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