Possible explanations for increasing inequality 1

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Possible explanations for increasing inequality 1. Skill-based technological progress Wage gains come from improving technology (e.g., computers) Those who can use and develop the new technology have the greatest gains wage wage Low-skill labor High-skill labor demand supply $5 supply demand $10 $6 $20 If demand for high-skilled labor has increased more, wage to high-skilled labor would go up Possible explanations for increasing inequality 1. Skill-based technological progress 2. Immigration and globalization
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5 The Foreign-Born Share of the US Population Is Rising 10.3 13.5 13.9 14.2 11.6 10.3 9.7 9.6 14.1 19.8 35.2 13.6% 14.7% 13.2% 11.6% 8.8% 6.9% 5.4% 4.7% 6.2% 7.9% 12.1% 0 10 20 30 40 50 60 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2005 -1% 1% 3% 5% 7% 9% 11% 13% 15% Year Millions Percent of Population Immigrants in the US, Number and Share of Population 30% 26% 17% 17% 10% 8% 32% 31% 20% 10% 0% 5% 10% 15% 20% 25% 30% 35% Less than high school High school Some college Bachelors degree Grad. or Prof. Degree Immigrants Natives Education levels of immigrants and natives (2005) Median annual earnings are $21,000 for immigrants and $28,000 for natives. Share of immigrants in US employment, 2005 15% 20% 24% 26% 34% 45% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% All US occupations Manufacturing production workers Food preparation workers Construction laborers Grounds maintenance workers Agriculture Immigration: big increase in supply of low- skilled workers wage wage Low-skill labor
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  • Spring '08
  • Kim
  • Skill-based technological progress

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