In order to explain the changing gap in earnings between skilled and unskilled workers in recent years, economists have proposed two hypotheses. One hypothesis emphasizes
A)compensating differentials.
B)the increased recognition that a larger stock of human capital usually leads to higher earnings.
C)technological progress.
D)the decreasing importance of international trade.

Question

Quizplus · Accepted Answer

The hypothesis that emphasizes technological progress suggests that improvements in technology have increased the demand for skilled workers who are able to use and adapt to new technology, while decreasing the demand for unskilled workers. This has led to a growing gap between the earnings of skilled and unskilled workers. The other options, such as compensating differentials, human capital, and international trade, may contribute to the changing earnings gap, but do not fully explain it.

In Order to Explain the Changing Gap in Earnings Between