WA 1 Income pdf

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1 Bowen Duan Dr. Prera Econs 102 Assignment 1 9/15/2022 Why has Income Inequality been rising since the 1970’s After reading this article, I believe that the first proposition is inconsistent with David Autor’s research results, but the second proposition is consistent with his research results. The author strongly disagrees with the reasons for increasing inequality in the United States put forward in Proposition 1. In his opinion, the increase in income inequality is not caused by the laziness of some Americans. On the contrary, he believes that the decline in the labor force participation rate of lowincome families is driven by the decline in demand for physical skills mainly provided by socially and economically disadvantaged groups with low education levels (Autor, 2014). It is worth pointing out that the transformation of the United States from a low- skilled labor-intensive agricultural economy to a technologically advanced first-world country has led to the automation of most manual work and the surge in demand for cognitive skills (Autor, 2014). As a result, those who cannot develop their skills through post-secondary education are finally shut out of the labor market, which leads to increased inequality. And the competition from the labor market in developing countries has intensified, and these countries provide manual labor at extremely low

2 prices, which also leads to further reduction of employment opportunities for low- skilled workers in the country so that they could widen the income inequality gap. Autor agrees with proposition 2. In his study, he mentions that public policy has a significant role in widening income inequality. For example, the federal marginal tax cuts lead to after-tax inequality, which encourages high-income earners to find ways (sometimes unethical) to earn higher income (Autor, 2014). Besides that, the decline of trade union members and bargaining power, as well as the decline in the value of the minimum wage, have aggravated income inequality (Autor, 2014). Besides that, the rise of education premiums rewards people with higher education and valuable skills with high income and high demand, thus widening the income inequality gap. Children whose parents have received higher education, such as college education are more likely to get the same educational qualifications as their parents, get high-paying jobs, or get wealth through intergenerational wealth transfer. On the contrary, children whose parents have low education levels face great challenges in receiving higher education. Therefore, they can only get low-paid jobs and are unlikely to get upward social mobility. Because of that, the inequality gap in the United States continues to widen.

3 Bibliography Autor, D. H. (2014, May 23). Skills, education, and the rise of earnings inequality among the "other 99 percent". Science , pp. 843-851. Retrieved from sciencemag.org.

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