5-1-07 - 151 lectures Rising Wage Inequality Institutional...

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1 151 lectures Rising Wage Inequality: Institutional Explanations SBTC explanation suggests to some that rising inequality is inevitable. We can suspect this conclusion because the technology is available and adopted in all countries, but only a few (the U.S. and the U.K.) have experienced substantial increases in inequality. A. Problems with the SBTC explanation 1. Remember that what we observe regarding rising returns to a college degree already reflects public policy, not just market and technological forces. --An increase in the relative demand for skilled labor was accompanied by a slowdown in the increase in the number of college graduates. It could have been accompanied by a much greater increase in the relative supply skilled labor. If that had occurred, relative wages would have remained unchanged. --That is what happened during the 1950s and 1960s with the expansion of college capacity, as well as during the period of electrification in the 1910s
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