Title: What’s caused the rise in income inequality in the US? | World Economic Forum
Headings: What’s caused the rise in income inequality in the US?
What’s caused the rise in income inequality in the US?
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Content: According to Massachusetts Institute of Technology professor David Autor, demand for skills has consistently increased across developed countries. The skill premium, then, is a result of skills not being supplied at a rate to keep up with demand. The proposed solution to inequality driven by these trends is increasing education and job training opportunities for workers so they can get better paying jobs. A second explanation is trade and globalization. Scholars, including Autor, point to increases in trade and offshoring as a cause of income inequality. According to this hypothesis, growing trade between the United States and the rest of the world, especially China, has increased the number of imports in the U.S. economy, which has led to job loss in industries that originally produced these goods in the United States. Offshoring has also affected jobs and wages. Both these trade phenomena lead to declining employment, falling labor force participation, and weak inflation-adjusted wage growth. Possible policy solutions for this trend include those that would make U.S. exports more competitive, among them the depreciation of the U.S. dollar. The last explanation suggests that U.S. government policies created an institutional framework that led to increasing inequality.