right (because after the training program there are now more high-skilled workers at every wage), which will

tend to drive down wages for high-skill workers. The combination of these two programs will result in a lesser

degree of inequality. The following figure illustrates these two labor markets. In the market for high-wage labor,

a skills program will shift supply to the right, which will tend to drive down wages for high-skill workers.

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10. A very strong push for economic equality might include extremely high taxes on high-wage earners to pay

for extremely large government social payments for people with much lower incomes. Such a policy could

limit incentives for the high-wage workers, lock the poor into a poverty trap, and thus reduce output. The

PPF in this case will have the standard appearance: it will be downward sloping.

11. For the second hypothesis, a well-funded social safety net might make people feel that even if their
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