Over the past several years, the earnings gap between high-skilled and low-skilled workers has widened because (i)
International trade has altered the relative demand for skilled and unskilled labor.
(ii)
Changes in technology have altered the relative demand for skilled and unskilled labor.
(iii)
The return to education for men has decreased, whereas the return to education for women has increased.

Question

Quizplus · Accepted Answer

The earnings gap between high-skilled and low-skilled workers has widened because of the changes in international trade and technology, which have increased the relative demand for skilled labor. However, there is no evidence to support the claim that the return to education for men has decreased while the return for women has increased. Hence, option (iii) can be eliminated. Therefore, the correct answer is (i) and (ii) only, which supports the idea that changes in technology and international trade have altered the demand for different types of labor, leading to an increase in the earnings gap between high-skilled and low-skilled workers.

Over the Past Several Years, the Earnings Gap Between High-Skilled