Catching Up, Structural Transformation, and Inequality: Lessons from Asia
While structural change is vital for Asia’s economic dynamism and growth, it may exacerbate inequality in the region.
This paper investigates the effect of structural change on inequality in Asian economies. The authors empirically examine the effect of structural change on wage inequality in Asia, using industry-level data for three skill groups of workers. Their evidence indicates that structural change, pushed by productivity catch-up with advanced economies, capital deepness and the shift of the economic structures to more skill-intensive industries, has exacerbated inequality in the region. However, they also find that policy responses, especially investment in education matching the higher demand for skills and competitive exchange rates, can mitigate the increase in inequality.
- Catch-up and Wage Inequality
- Data and Empirical Strategy
- Concluding Observations