Suppose the distribution of innate ability is distributed symmetrically throughout a population but that the wage distribution is positively skewed. What most likely explains this?
A)A regressive tax code.
B)Decreased immigration.
C)Differences in human capital accumulation.
D)A decreasing Gini coefficient.
E)A non-competitive labor market.

Question

Quizplus · Accepted Answer

Differences in human capital accumulation could explain why the wage distribution is positively skewed despite a symmetrical distribution of innate ability. Individuals with higher levels of human capital (i.e. education, skills, experience) are able to command higher wages even if their innate ability is not significantly different from those with lower levels of human capital. This can lead to a positive skew in the wage distribution.

Suppose the Distribution of Innate Ability Is Distributed Symmetrically Throughout