With Thomas Piketty, Kevin Murphy, and Stephen Durlauf. View it at Mark Thoma’s blog.
Murphy offers the simplest explanation. Skilled workers become scarce, and less-skilled workers become abundant. The price of skilled labor rises, and those workers respond by working more. The price of less-skilled workers goes down, and they respond by working less. So income inequality shifts for both price and quantity reasons.
Why do skilled workers become scarce and less-skilled workers become abundant? I would say look at the four forces: bifurcated marriage patterns, New Commanding Heights (shift toward education and health care, aided by government subsidies), Moore’s Law, and globalization.
Isn’t there a “no true Scotsman” aspect to “skilled workers?” Why would skilled workers be more scarce now other than the skillsets that are rewarded and stable are becoming more specialized? Maybe this is common knowledge in economics, but if so shouldn’t you guys be more precise in your terminology?
Was thinking the other day about this.
How bad would the inequality problem be if the left half of the skill distribution had tangible job skills by the time they were 21?
It seems to me that most of the concern over inequality comes down to this.
Of course that leads to a few other questions you could ask:
What if the job skills gap is actually a human quality gap and the dispersion of intelligence and conscientiousness has concentrated since WWII?
What if the job skills gap represents a broader institutions gap and the US (and most of the developed world) now faces a problem developing nations run into when they have to do something more complicated than make cheap t-shirts to grow their economy?
I think it’s possible that the composition of valuable economic activity has refined to the point that it requires institutional quality that’s an order of magnitude better than what most of the world has today.
On bifurcated marriage patterns, would anyone be able to clear up a mystery for me please?
As I understand it: In the ‘Mad Men’ trope, upper middle class men marry their secretaries. in 2015, upper middle class men marry upper middle class women they met at selective colleges.
What I don’t understand, is who did upper middle class women marry in the Mad Men era, if the men married their secretaries?