Dynamics and sources of wage inequality in Taiwan: Evidence from employer‐employee matched data

Po‐Chun Huang, Huei‐Ming Chen, Hsien‐Ming Lien and Tzu‐Ting Yang

Economic Inquiry, 2026, vol. 64, issue 2, 574-590

Abstract: This paper studies the decline in wage inequality in Taiwan from 2004 to 2019 using administrative employer‐employee matched data and the Abowd–Kramarz–Margolis (AKM) framework. Unlike the U.S. and Europe, Taiwan experienced an 8.4% drop in wage inequality, driven largely by reductions in within‐firm disparities. Minimum wage hikes likely contributed to this compression, as lower‐tail inequality declined due to faster earnings growth among low‐wage workers, while upper‐tail inequality remained relatively stable. AKM estimates, robust to bias correction, indicate that firm‐specific wage premiums account for a small share of inequality, while worker‐firm sorting has become increasingly important in explaining wage dispersion.

Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/ecin.70044

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ecinqu:v:64:y:2026:i:2:p:574-590

Ordering information: This journal article can be ordered from
https://ordering.onl ... s.aspx?ref=1465-7295

Access Statistics for this article

Economic Inquiry is currently edited by Tim Salmon

More articles in Economic Inquiry from Western Economic Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().