Time-series wage differential in Taiwan: The role of international trade

Been Lon Chen, Mei Hsu

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Abstract

Rising relative wages between skilled and unskilled workers in developed countries has been a popular subject of recent studies. This paper analyzes Taiwan, a semi-developed economy, where the relative wage reveals a declining trend since the mid-1980s. The authors study the role of international trade. A major point of departure is to distinguish the effects of net exports to OECD countries from those to non-OECD countries. The paper also differentiates the effects of net exports to China from those to non-OECD countries except China. It is found that net exports to the OECD countries raise the relative wage of skilled workers, whereas net exports to non-OECD countries and China diminish the relative wage. Moreover, the impacts of net exports to China are much larger than those to OECD and other non-OECD countries. The documented wage effects of international trade in this work diverge from what existing works have argued based on Heckscher-Ohlin theory.

Original languageEnglish
Pages (from-to)336-354
Number of pages19
JournalReview of Development Economics
Volume5
Issue number2
DOIs
Publication statusPublished - 2001 Jan 1
Externally publishedYes

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ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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