Demographic Change and Income Inequality in Taiwan
Date Issued
2012
Date
2012
Author(s)
Chang, Yi-Ting
Abstract
Taiwan experienced significant increases in the degree of income inequality over the past three decades. This trend has renewed interest in the study of the factors that may explain changes in income inequality. In this thesis, I focus on the effects of demographic change. I use the Survey of Family Income and Expenditure (SFIE) data for the period 1981-2006. I apply counterfactual decomposition methods (Bishop et al. 1997；Machado and Mata 2005) based on conditional quantile regressions to investigate the effects of demographic factors on income inequality. The results show that the impact of age was quite substantial. The effects of age, college education, marital status, and number of earners in the household on income inequality have grown lager across time, while the influence of household size has decline. I further decompose the trend of income inequality into changes in the composition of demographic characteristics and changes in the return to these characteristics. I find evidence that changes in the demographic composition in 1980s and 1990s are responsible for the rising inequality. In contrast, changes in the return have only a minor role. Thus the main driving force of rising inequality is the change in demographic composition.
Subjects
demographic change
income inequality
quantile regression
decomposition
SDGs
Type
thesis
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