Principles of Economics- Mankiw (5th) 409

Principles of Economics- Mankiw (5th) 409 - CHAPTER 19 E A...

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CHAPTER 19 EARNINGS AND DISCRIMINATION 421 the United States tends to import goods produced with unskilled labor and ex- port goods produced with skilled labor. Thus, when international trade ex- pands, the domestic demand for skilled labor rises, and the domestic demand for unskilled labor falls. The second hypothesis is that changes in technology have altered the rela- tive demand for skilled and unskilled labor. Consider, for instance, the intro- duction of computers. Computers raise the demand for skilled workers who can use the new machines and reduce the demand for the unskilled workers whose jobs are replaced by the computers. For example, many companies now rely more on computer databases, and less on filing cabinets, to keep business records. This change raises the demand for computer programmers and reduces the demand for filing clerks. Thus, as more firms begin to use computers, the demand for skilled labor rises, and the demand for unskilled labor falls. Economists have found it difficult to gauge the validity of these two hy-
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