Income Inequality in Taiwan 1976-1995: Changing Family Composition, Aging, and Female Labor Force Participation

Change in income inequality in Taiwan from 1964 to 1995 is sensitive to how household incomes are adjusted for household composition. The reasonable practice of dividing household income by persons (or adults) in the household eliminates the widely noted increase in income inequality from 1980 to 1995, and calls into question whether income inequality decreased substantially from 1964 to 1975. The increasing share of the population over age 30 that is associated with the demographic transition has contributed only slightly to increasing income inequality across all ages. The entry of women into the labor force is concentrated among higher wage groups, and thus when one attributes a shadow wage to the time of all persons, regardless of how much they work in the labor force, this broader measure of "full income" inequality is more equal than market income inequality, and it has decreased over time. JEL Classification: O15, J12