Question

The OECD is a group if the 35 mostly rich democracies. They review income gaps among age groups. A recent report shows that Millennials are doing better than

OECD citizens now in the early 30's have 7% more disposable income than Generation X had at that age, over 40% more than boomers enjoyed when they were that age. The younger generations may sigh when older people say that they have it easier but the number say that the do. Americans in their early 30's are slightly worse off than the preceding generation due to the linger of the global financial crisis. Many are not acquiring wealth or assets in the manner as preceding generations.

Class,

What are your thoughts?

Do you feel this wage gap?

Answer 1

Basically the main problem is with the demographic dividend windows among different countries (Millennials). Also the problem is arising because a part of the labour force remains unskilled due to lack of proper education. Also among the countries the poor health condition of the childrens and the elder generation is also a problem. Poor health necessarily imply that poor amount of skill formation as they are endogenous variables. The wage gap is arising because of skilled and unskilled workers in the labour market as in earlier studies it was shown by Galor Zeira(1994) in their research paper.

However the recent studies have shown that if the demographic dividend is not utilised properly in such countries then that will be detrimental to the growth path of the economy.

Also we need to keep in mind that if the economies are globally interconnected via international trade also there exists huge technological advancement in the society then that would reduce the number of employed persons in the economy which is referred as the detrimental effect of immesarising growth via Keynesian argument. So in such real situation the wage gap ewil increase further.