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Time‐Series Wage Differential in Taiwan: The Role of International Trade

Author

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  • Been‐Lon Chen
  • Mei Hsu

Abstract

Rising relative wages between skilled and unskilled workers in developed countries has been a popular subject of recent studies. This paper analyzes Taiwan, a semi‐developed economy, where the relative wage reveals a declining trend since the mid‐1980s. The authors study the role of international trade. A major point of departure is to distinguish the effects of net exports to OECD countries from those to non‐OECD countries. The paper also differentiates the effects of net exports to China from those to non‐OECD countries except China. It is found that net exports to the OECD countries raise the relative wage of skilled workers, whereas net exports to non‐OECD countries and China diminish the relative wage. Moreover, the impacts of net exports to China are much larger than those to OECD and other non‐OECD countries. The documented wage effects of international trade in this work diverge from what existing works have argued based on Heckscher–Ohlin theory.

Suggested Citation

  • Been‐Lon Chen & Mei Hsu, 2001. "Time‐Series Wage Differential in Taiwan: The Role of International Trade," Review of Development Economics, Wiley Blackwell, vol. 5(2), pages 336-354, June.
    • Handle: RePEc:bla:rdevec:v:5:y:2001:i:2:p:336-354
    DOI: 10.1111/1467-9361.00127
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    Cited by:

    1. Shao-Hsun Keng & Peter F. Orazem, 2019. "Performance pay, the marriage market and rising income inequality in Taiwan," Review of Economics of the Household, Springer, vol. 17(3), pages 969-992, September.
    2. Judith Liu & Mei‐Ying Lai & Zong‐Shin Liu, 2022. "Trade liberalization, domestic reforms, and income inequality: Evidence from Taiwan," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1286-1309, August.
    3. Zouhair Mrabet, 2012. "The Impact of Trade Liberalization on Labor Market of Developing Countries: What can Literature tell us?," Journal of Economics and Behavioral Studies, AMH International, vol. 4(6), pages 307-318.
    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. Hsiao-chuan Chang, 2003. "International Trade, Productivity Growth, Education and the Wage Differential: A Case Study of Taiwan," Journal of Applied Economics, Universidad del CEMA, vol. 6, pages 25-48, May.
    7. 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.
    8. Devadason, Evelyn, 2007. "Do Trading Partners Matter for Labour Market Inequality? The Malaysian Case," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 3(1-2), pages 1-14.
    9. 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.
    10. Chang, Hsiao-chuan, 2003. "International Trade, Productivity Growth, Education and the Wage Differential: A Case Study of Taiwan," Journal of Applied Economics, Universidad del CEMA, vol. 6(1), pages 1-24, May.

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