Paradise gained and lost: shared prosperity in East Asian welfare production regimes

Abstract

This paper expands the research on how shared prosperity is achieved in East Asian countries (regions). Based on welfare production regime theory, this paper advances a theoretical framework to link economic growth to income distribution. The main argument is that the match between the skills developed by social protection systems and the needs of product market strategies is key to economic progress. The skills and the social protection systems could also influence income allocation through distribution and redistribution. The net effect of the two channels determines the result of income equality. A longitudinal exploration of Japan, Taiwan and Korea in the export-led growth period (1961–1979) and the knowledge economy period (1980–1996) supports the argument. A policy implication of the argument is that China could strategically adjust its welfare production regime to achieve shared prosperity.