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Population Aging and Regional Income Inequality in Taiwan: A Spatial Dimension

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  • Chun-Hung Lin
  • Suchandra Lahiri
  • Ching-Po Hsu

Abstract

In the backdrop of a spatial effect, this paper reconsiders the importance of life cycle in explaining the evolution of regional household income inequality in Taiwan. For the empirical period examined (1998–2006), a fixed effect panel data analysis reveals a high level of spatial clustering across 22 regions of Taiwan. When we control for spatial dependence we observe a positive relation between aging and income inequality. This regional inequality is explained by a decline in the multigenerational families followed by a rise in the elderly households with no additional income. Further, the level of inequality in income distribution of own province is positively and significantly determined by inequality in the neighboring province. To investigate further the process of regional development in Taiwan, we analyze the convergence–divergence dynamics employing spatial econometric methods. We observe both absolute and conditional beta divergence. The result points to the famous catching up or falling behind phenomenon. Failure to account for such spatial effect may cause biased results and incorrect policy implications. Copyright Springer Science+Business Media Dordrecht 2015

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  • Chun-Hung Lin & Suchandra Lahiri & Ching-Po Hsu, 2015. "Population Aging and Regional Income Inequality in Taiwan: A Spatial Dimension," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 122(3), pages 757-777, July.
    • Handle: RePEc:spr:soinre:v:122:y:2015:i:3:p:757-777
    DOI: 10.1007/s11205-014-0713-8
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    Cited by:

    1. Xinxin Wang & Kevin Z Chen, 2016. "Will China’s Demographic Transition Exacerbate Its Income Inequality? A CGE Modeling with Top-down Microsimulation," Working Papers id:11406, eSocialSciences.
    2. Ling Yang & Kai Zhao & Zhen Fan, 2019. "Exploring Determinants of Population Ageing in Northeast China: From a Socio-Economic Perspective," IJERPH, MDPI, vol. 16(21), pages 1-19, November.
    3. Omoniyi B. Alimi & David C. Maré & Jacques Poot, 2018. "More Pensioners, Less Income Inequality? The Impact of Changing Age Composition on Inequality in Big Cities and Elsewhere," Advances in Spatial Science, in: Roger R. Stough & Karima Kourtit & Peter Nijkamp & Uwe Blien (ed.), Modelling Aging and Migration Effects on Spatial Labor Markets, chapter 0, pages 133-159, Springer.
    4. Omoniyi B Alimi & David C Maré & Jacques Poot, 2017. "More pensioners, less income inequality?," Working Papers 17_02, Motu Economic and Public Policy Research.

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