ECIN Replication Package for "Dynamics and Sources of Wage Inequality in Taiwan: Evidence from Employer-Employee Matched Data"

This paper studies the decline in wage inequality in Taiwan from 2004 to 2019 using administrative employer-employee matched data and the Abowd-Kramarz-Margolis (AKM) framework. Unlike the U.S. and Europe, Taiwan experienced an 8.4% drop in wage inequality, driven largely by reductions in within-firm disparities. Minimum wage hikes likely contributed to this compression, as lower-tail inequality declined due to faster earnings growth among low-wage workers, while upper-tail inequality remained relatively stable. AKM estimates, robust to bias correction, indicate that firm-specific wage premiums account for a small share of inequality, while worker-firm sorting has become increasingly important in explaining wage dispersion.