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: Falling labor force participation, stagnating median wages, and declining share of labor income, for example, are all part of current U.S. labor market trends. These trends are certainly connected, but they also have been studied through various research frameworks, which can inexorably lead to different policy implications. Acknowledging the complex and intertwined nature of these explanations is crucial to developing policy solutions that address the joint causes of inequality. Of the three explanations for rising inequality, the so-called technology-and -education argument is the most prominent. This hypothesis focuses on the large wage premiums for workers with high levels of education and skills. 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.