market theory argues that the salary gap between the median and the top 1 percent is not due to educational

differences.

Economists use the demand and supply model to reason through the most likely causes of this shift. According

to the National Center for Education Statistics, in recent decades, the supply of U.S. workers with college

degrees has increased substantially. For example, 840,000 four-year bachelor’s degrees were conferred on

Americans in 1970. In 2018–2019, 2.0 million such degrees were conferred—an increase of over 138%. In
Figure 15.9, this shift in supply to the right, from S0 to S1, by itself should result in a lower equilibrium wage for
high-skilled labor. Thus, we can explain the increase in the price of high-skilled labor by a greater demand, like
the movement from D0 to D1. Evidently, combining both the increase in supply and in demand has resulted in a
shift from E0 to E1, and a resulting higher wage.
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