Labor Economics - Term Paper Example

This is because the poor did not have enough time to invest as the rich people in the American populations. It affected women and black Americans the most because they were poor before the economy of America grew (Schiller, 2004). The inequality happened from a long time ago because of the change in the labor market. This is because the people that worked as skilled laborers in the early 1970 received a substantial pay. This was in contrast to money received by the unskilled laborers. The income inequality increased over the years, and this is what made the skilled laborers rich and the unskilled poor.

The international trade is to blame for the increase in the outcome imbalance (Blinder, 2011). This is because the trade led to the increased cost of products, which reduced the profits of the companies. This led the companies to lay off some of its employees and many unskilled laborers lost their jobs. Technology also led to the imbalance because with the use of better machines unskilled laborers had no work to do in a company. Therefore, they lost their jobs as the machines replaced what they did in the company.

People came to the realization that they had to receive a decent education to secure a reasonable job. This made the companies get many skilled workers and the gap increased between income of the skilled laborers and the unskilled laborers. However, the growth of income inequality has produced beneficial results more than the bad results. This is because the gap that developed amid the rich and the poor motivated people to work harder. When the economy of America grew significantly, the rich people received a larger salary, and this is especially those who had high education qualification.

The poor people received less pay, and they constituted the people that had low education qualification (Blinder, 2011). This then made those who had less qualification in education to work harder in their places of work.