Question

In late 19th-century technological development increased relative demand for unskilled workers in most European countries compared with the demand for skilled workers, meanwhile, the immigration to American countries (mainly to the USA but also to Latin America and Canada) decreased the relative supply of unskilled labor force in Europe. How would these two trends affect the inequality of skilled and unskilled workers?

Answer 1

The given two trends will decrease the inequality between skilled and unskilled workers, because there will be relatively bigger increase in the wage of unskilled workers due to higher relative demand and lower supply of unskilled workers. It will put upward pressure upon the wage rate paid to the unskilled workers. So, wage rate as well as the purchasing power or income earned by the unskilled workers will increase, to decrease the inequality between skilled and unskilled workers.