Wage Stagnation? Fact Disclosure and Cross-Country Comparison

This paper sheds light on three important issues in the macroeconomics literature, which comes to a better understanding of Taiwan’s wage stagnation. First, we explore the trend of labor income shares, namely the labor income-output ratios, in Taiwan. This enables us to understand the distribution or tradeoff between labor and capital shares. Second, we calculate the correlation coefficients between real wages and gross domestic product (GDP) per capita, showing that whether Taiwan’s real wages and national incomes move in the opposite direction. Third, we calculate the gap between the marginal product of labor and real wage. This focus shows whether workers’ salary is consistent with their productivity in Taiwan. Of particular importance, in all issues we compare the Taiwan case with other neighboring countries of Asia. By these cross-country comparisons, we would like to examine whether the wage stagnation in Taiwan is unique or common in Asian countries. Finally, we briefly discuss Taiwan’s wage differences by sector and by education.