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Unformatted text preview: o Julia Roberts (movie star) Skills very difficult to reproduce • D for Julia Roberts + Alex Rodriguez • Small S + large D → equil. Wage high • Effect of education on equil. Wage rates: o D = MRP=(MP)(MR) Education => more productive => MP↑ => MRP ↑ => D for labor ↑ => higher equil. Wage o S: education is costly to acquire => all else equal, S of labor farther to left for highly educated workers o Both D + S: highly educated have higher earnings • 1910: US 11% finished HS • Legislatures: o Mandatory school attendance o School bus o School district consolidation o 1940: 60% o 1960 > 80% • “Great Compression” of wage rates o Early 20 th cent. : ↓ in inequality • Since~ 1975, ↑↑↑ in D for highly skilled labor (e.g., college) also, experience • Since 1975↑↑↑ in inequality...
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This note was uploaded on 04/19/2011 for the course EC 201 taught by Professor Ballard during the Fall '08 term at University of Michigan.
- Fall '08