Minimum Wage Impact on Income and Poverty: Evidence From Taiwan

Abstract

This paper investigates the impact of minimum wage policies on income and poverty across Taiwan and its six metropolises. Utilizing data from 1993 to 2019, the study employs various regression models to analyze how adjustments to the minimum wage influence average household income and poverty rates. The findings reveal that increasing the minimum wage does not significantly raise average per capita income. However, elevating the minimum wage relative to the minimum living cost significantly mitigates poverty, particularly among lower-income groups in urban areas. These results indicate that while minimum wage increases alone may not substantially enhance average income levels, aligning the minimum wage with the cost of living can effectively reduce poverty. This study offers valuable insights for policymakers, highlighting the importance of considering the real purchasing power of the minimum wage in efforts to improve the living standards of low-income workers and reduce economic inequality.