The “M-shaped Society” concept is a hot issue in Taiwan ever since Kenichi Ohmae defined it. I found this article published in National Policy Foundation (NPF) Research Report.

Ohmae’s concept has immediately caught the attention of the general public as well as government policy makers in Taiwan. Many have recently argued whether the income distribution structure has transformed into an M-shaped curve. For instance, consumer prices have escalated over the years, but the wage seems to have stood still. Education expenditures and child bearing costs have particularly surged and become unbearable to many families. Many people have therefore claimed themselves as “near poor” group. Those who have suffered irregular employment or unemployment may even fall into the so-called “new poor” class. On the other side of the island, it has been often reported that housing market in urban area has reached a record of high price, which is far beyond the affordable price for most people in the society. Luxurious goods have well sold at unprecedented price, which is hardly reached by the general public. It seems that a divided society is becoming a catchword for recent Taiwan society.

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Examining the unemployed population by age, we found that those aged 25-29 remained the highest rate of unemployment as compared to other age groups. The majority of those aged 25-29 are university and college graduates, who are conventionally expected to be in the middle-income class. This suggests that if the unemployment rate of high-educated population remains relatively high, the middle-class will be more likely to decline in the near future.

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Unlike in Japan, the earnings of workers in Taiwan did not significantly decrease in recent years. Taiwan seems to deviate from the M-shaped society as Ohmae defined. Although Ohmae focused on the decline of the middle classm, he did not provide any statistical measurement in his well-known book. We thus develop two tentative but handy measures for examining the shift of middle class, and coined them as “the Balance Index” and “the M-ratio” respectively. The former was constructed as a relative measure among different income groups, while the latter was designed as a measure indicating the change of the middle class relative to the overall contribution of people.

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