Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 20 - Part VI - Income Inequality and Poverty - Problems and Applications - Page 431: 1

Answer

One factor leading to more income inequality is that of an increase of human capital. Those with higher incomes are more likely to have additional education and/or training in their industry of work (compared to those with lower incomes).

Work Step by Step

Another factor leading to more income inequality is that of an increase of unskilled labor in other countries. With an increase of unskilled labor in other countries (and at lower wage levels), demand for domestic unskilled labor decreases. In turn, the domestic unskilled laborers have lower incomes (and more income inequality).
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