Economists who attempt to explain the increasing earnings gap between skilled and unskilled workers offer two main hypotheses:
A)one hypothesis emphasizes education, and the other emphasizes compensating differentials.
B)one hypothesis emphasizes education, and the other international trade.
C)one hypothesis emphasizes international trade, and the other emphasizes technology.
D)one hypothesis emphasizes technology, and the other emphasizes compensating differentials.

Question

Quizplus · Accepted Answer

The two main hypotheses for explaining the increasing earnings gap are education and technology on one hand, and international trade on the other. Some economists argue that advances in technology have increased the demand for skilled workers, who can use and adapt to new technologies, while reducing the demand for unskilled workers. Others argue that globalization and increased competition from low-wage countries have reduced the bargaining power of workers in developed countries, leading to lower wages for unskilled workers.

Economists Who Attempt to Explain the Increasing Earnings Gap Between