ABSTRACT
We’ve got two economic problems at the bottom of our economy. The first problem is this: There are adults who work full time, but their low education and/or skill results in a low annual income. This has always been a problem, and it has intensified during the past two decades because wage inequality has been increasing in both the United States and most other economically advanced countries. Most economists cite two reasons for rising wage inequality: technological change, and greater international trade with low-wage countries. It is not immediately obvious that technological change must widen wage inequality between highly educated and less educated persons. After all, new machinery generally raises the productivity and wage of all workers, and over the past two centuries many new machines especially raised the productivity of workers with little education. It appears, however, that recent technological change, often involving computers, has favored highly educated workers more than less educated workers. Moreover, advances in telecommunications and transportation have increased international trade with low-wage countries, and this tends to put downward pressure on the wages of less educated workers in economically advanced countries.
