Discuss the increase in income inequality observed in the U.S. over the last 40 years from...

Discuss the increase in income inequality observed in the U.S. over the last 40 years from the perspective of the Heckscher-Ohlin Model. Analyze the potential causes of this increase and provide graphical illustrations if applicable.

Solutions

Expert Solution

The case of income inequality is a byproduct of trade theory, where one will have a comparative advantage or the benefiter and the other party is the looser. if we will discuss the income inequality it is present in any mode of dual participation. whether it is in trade, business, or labor and capitalist any of these if anyone is gaining the other one is relatively loosing. So when we are discussing income inequality that shows the relation between the labor income and labor hour. if we tray to represent this relationship through Heckscher ohline theory, due to globalization the price of product may decrease to gain more profit by capital intensive country whereas the laborer will get low real income (we are considering lower real income for comparison) which will force them more down in poverty. so here both skilled and unskilled labor will suffer and unskilled labor will suffer more than the skilled one. Again in Heckscher ohline model, the owner of an abundant factor will gain where is the owner of scare factor will lose. so change in the price of skilled intensive good to unskill intensive good. gradually in the US the no. of unskilled labor increased. here technology played a significant role to differentiate the skilled and unskilled laborers. In figure when there is an increase in the ratio of Ws/Wu that means the skill upon unskill increase that means the employment will decrease due to the no. of skilled labor is less compare to unkilled.

if we will discuss the technology biased trade then skilled laborers will earn more income compared to unskill laborer and that twill create an income gap.

Rahul Sunny answered 1 month ago

Next > < Previous

Related Solutions

Discuss the increase in income inequality seen in the U.S. over the last 30 years. Analyze...

Discuss the increase in income inequality seen in the U.S. over the last 30 years. Analyze the potential causes of this increase.

7) During the last two decades, there has been an increase in income inequality in the...

7) During the last two decades, there has been an increase in income inequality in the United States. Which of the following is a reason income inequality in the United States has increased? A) There are sharply lower marginal tax rates now than in the 1970s. B) Marginal tax rates have increased significantly since the 1970s. C) There has been a great increase in efficiency of government antipoverty programs. D) There has been a significant drop in the number of...

1. what are one or two convincing reasons for the increase in income inequality over the...

1. what are one or two convincing reasons for the increase in income inequality over the last 35 years (approximately)? 2. The NPR piece presents a debate between two Nobel laureate economists concerning inequality. Becker argues for a ‘good kind of inequality’, Solow begs to differ. Can inequality ever be “good”? Why or why not? 3. Currently, the ratio of the mean income of the Richest 20% of households to the mean income for the Poorest 20% of households is...

while it’s generally agreed that income inequality has worsened over last 20-30 years, what does the...

while it’s generally agreed that income inequality has worsened over last 20-30 years, what does the data indicate about the stability over a period of time in the movement of Americans up and down the economic ladder. Explain how economists go about measuring “churning” in the distribution of income.

Discuss the growing income inequality in the U.S. and the world with someone mature enough to...

Discuss the growing income inequality in the U.S. and the world with someone mature enough to have some perspective from experience about it. Ask them what they think about the widening gap between the rich and the rest of us in America, as our course materials speak of this problem. How has the economic trend for middle class Americans affected them? How as it affected you?

The following table shows the actual demand observed over the last 11 years

The following table shows the actual demand observed over the last 11 years Year1234567891011Demand7951013713149118This exercise contains only parts b, c, and d.b) Using the 3-year moving average, provide the forecast from periods 4 through 12 (round your responses to one decimal place). Year456789101112Forecastc) Using the 3-year weighted moving average with weights 0.20. 0.35. and 0.45. using 0.45 for the most recent period provide the forecast from periods 4 through 12.Year456789101112Forecastd) Mean absolute deviation for the forecast developed using the 3-year moving average...

Discuss at least seven reasons for income inequality in the U.S. economy by giving examples of...

Discuss at least seven reasons for income inequality in the U.S. economy by giving examples of how you are or are not affected by each.

Briefly list 5 reasons income inequality has over the 35 years.

Imagine that I have observed a warming trend in global temperatures over the last 10 years....

Imagine that I have observed a warming trend in global temperatures over the last 10 years. List two mechanisms that might explain this trend

8) Answer all three parts: (a) Why has inequality increased over the last 50 years and...

8) Answer all three parts: (a) Why has inequality increased over the last 50 years and why does it continue to increase? Is there a logical end point to this or are we headed back towards a period when the world had a handful of aristocrats and their workers/peasants/servants? (b) Do you consider income and wealth inequality to be a problem in the world today? If so, what do you think can be done about it? If you don't think...

Subjects