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Working Paper Series 2021-3 Income Inequality, Growth Inequality, and Redistribution in Taiwan, 2001-2015: Evidence from Distributional National Account
Title：
Working Paper Series 2021-3 Income Inequality, Growth Inequality, and Redistribution in Taiwan, 2001-2015: Evidence from Distributional National AccountIntroduction：
This paper constructs Distributional National Accounts for Taiwan to provide a
comprehensive view of various inequality issues. We distribute national income into
every individualistic adult to construct new pre-tax and post-tax individual income
series that allow us to estimate the income and growth distribution of the whole popu-
lation and evaluate the e ects of redistribution. Currently, Taiwan is the third country
that is able to contrast the distribution of pre-tax income with that of post-tax income.
We found income inequality in Taiwan is similar to the magnitude of that in the U.S.,much higher than previously estimated. For example, the Gini coecient of pre-tax in-
come is 0.63, and the top 10% (1%) income share is 48% (19%) in 2015. Furthermore,
pre-tax income inequality has risen rapidly: The top 10% share has increased from
43% in 2001 to 48% 2015. This rise of top income shares is mainly from the upsurge
of capital income. Second, the distribution of economic growth is extremely unequal:
The Gini coecient of economic growth is 0.72, and about 92% of the population has
an income growth rate lower than the average growth rate. Finally, the redistribution
system in Taiwan is e ective: it reduces total income inequality by 39%, higher than
the U.S. (34%) and France (24%). Moreover, the magnitude and the e ect of redis-
tribution are increasing and it successfully
attens the rising pre-tax inequality into
a stable trend of post-tax income inequality. Among all policies, the National Health
Insurance system accounts for the most bene ts of the bottom income groups.