On the Puzzling Slowdown of Wage and Productivity Growth in Taiwan: Evidence from a Comparison with South Korea

In Taiwan, since the early 2000s the growth rate of real wages has been very low and has been even negative for high-skilled workers. This paper tries to shed new light on the potential causes of this puzzling development with a comparison to South Korea. In many dimensions, most notably wages and labour productivity, both economies developed quite similarly between 1995 and 2001/2002 but diverged thereafter. We relate the development of wages and labour productivity in the two economies to sectoral structural change and to sectoral differences in labour productivity growth, skill upgrading and foreign trade.

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