Question

~500 words:

As employment polarized, what happened to wages? Why did this happen?

Answer 1

Solution:-

With the polarization of employment in the recent years, it has been observed that wages of high skilled workers have risen at an alarming rate while the wages of low and middle skilled workers have declined. This has increased disparity in the level of the wages in the country. While high skilled workers are getting more wages, the middle and low skilled are getting less wages. This polarization has impacted the medium and low skilled workers adversely reducing their wages.job polarization caused wage polarization (growing inequality in the top half of the wage distribution but stable or shrinking inequality in the bottom half) in the 1990s is entirely circumstantial, relying on the two trends (employment and wage polarization). Real wages for middle-class workers stagnated while earnings of the lowest and the highest percentiles of the wage distribution increased. It thus seems natural to think that the polarisation of wages is just another consequence of the declining demand for routine tasks. However, there exists some evidence that is not entirely consistent with this thought: virtually all European countries experienced job polarisation as well, yet most of them haven’t seen wage polarisation but rather a continued increase in inequality across the board. Moreover, other factors that may have generated wage polarisation in the US have been proposed (e.g. an increase in the minimum wage, de-unionisation, and ‘classical’ skill-biased technical change).