of similarly skilled workers around the globe.
376 15 • Poverty and Economic Inequality

We can view the market for high-skilled labor as a race between forces of supply and demand. Additional

education and on-the-job training will tend to increase the high-skilled labor supply and to hold down its

relative wage. Conversely, new technology and other economic trends like globalization tend to increase the

demand for high-skilled labor and push up its relative wage. We can view the greater inequality of wages as a

sign that demand for skilled labor is increasing faster than supply. Alternatively, if the supply of lower skilled

workers exceeds the demand, then average wages in the lower quintiles of the income distribution will

decrease. The combination of forces in the high-skilled and low-skilled labor markets leads to increased

income disparity.

15.5 Government Policies to Reduce Income Inequality

LEARNING OBJECTIVES

By the end of this section, you will be able to:
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