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The purpose of this research is to study the lead-lag relationship between the
Taiwan's business cycle and real wages on the eight industries with the most employees. The thesis applies the data published by the Department of Statistics, the Earnings Exploration & Information System of Executive Yuan, Taiwan's National Development Council, and Taiwan Economic Journal. The sample period covers 312 months of data from January 1994 to December 2019. The findings of the research are as follows:
1.The real wages of the accommodation and food service industries lead the economy and the stock market around the bottoms of the business cycle. Over these periods, the government often expands consumption and promotes economic growth to prevent the economy from going further down, which explains why the wages of the aforementioned industries act as the leading indicators.
2.The average difference percentages of the real wages of the construction and engineering industries are the smallest, regardless of the peaks or the bottoms. This means that no matter how the economy changes, the real wages of those industries will not change accordingly, reflecting that the real wages of those industries maintain stable or slightly go down in the long term.
3.The real wage of the financial and insurance industry leads (lags) the economy in reaching its peaks (bottoms), indicating that the more optimistic the economy, the higher the real wage of the industry. Regardless of the peaks and bottoms, the average difference percentage of the real wage is the largest, which means that the real wage is more vulnerable to the fluctuations the economy.
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