Ebook Wage Inequality and Technological Change in Taiwan
The information revolution has greatly affected the global economy ever since the late 20 th century. A concomitant phenomenon of the diffusion of ICTs (information and communication technologies) is that it may account for the widening wage dispersion found in the U.S. and several OECD countries since the findings of Bound and Johnson (1992) and Katz and Murphy (1992). The literature studies the rise in wage dispersion by examining whether skill biased technological change, international trade, or institutional reform have contributed to the rising relative wage of skilled workers.
The empirical evidence has reached a consensus since the early 1990s, in that skill-biased technological change is the main driving force of the rising wage dispersion in the 1980s. Nevertheless, several studies still cast doubt on the role of skill-biased technological change in accounting for wage dispersion (Card and DiNardo (2002), Beaudry and Green (2005), and Lemieux (2006a)).
Taiwan has also experienced ICT technological change and the widespread diffusion of ICTs. The purpose of this paper is to investigate whether computer-based technological change is related to wage inequality in Taiwan, if there is any, over the period 1983-2006. To explore both the time series and the cross section nature of wage inequality, our analysis is based on a pseudo panel dataset drawn from The Survey of Family Income and Expenditure, Taiwan.
We first document the changes in the nature in Taiwan’s wage structure using data from The Survey of Family Income and Expenditure in Taiwan Area of Republic of China, by examining various measures of wage inequality. Although the magnitude of Taiwan’s wage inequality is much smaller than those in the U.S. and the U.K., which had the largest increase in the college premium during the 1980s among OECD countries, the data show that Taiwan’s household wage inequality continues to rise over time with a moderate rise in the 1990s. The timing is consistent with the rapid development of ICTs in the 1990s. Thus, this paper focuses on discussing whether the computer-based technological change has played a role in accounting wage inequality in Taiwan.
The conventional literature of earnings inequality follows the approach of Mincer (1958), emphasizing that earnings inequality is mainly attributed to human capital (education and experience). The result can be summarized by the standard Mincer earnings equation (Mincer (1974)). Moreover, in the literature of economic development, education expansion is often found to be positively associated with education inequality and negatively associated with the level of schooling. The dependent variable of these studies is often the level of wage or the variance of wage.
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