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

  • Chun-Hung Lin
  • Peter Orazem

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.

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Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 39 (2003)
Issue (Month): 5 ()
Pages: 89-108

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Handle: RePEc:taf:jdevst:v:39:y:2003:i:5:p:89-108
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  1. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
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