The Wage Gap Is Widening In Other Countries, Too

Liberals and conservatives agree: Wage inequality in the U.S. rose significantly in the 1980s. The pay gap between well-educated and poorly educated workers clearly widened, as did the wage difference between experienced and inexperienced workers. But whats still in dispute is why inequality has widened so much. Some economists point to domestic causes, such as deteriorating school systems and the social and economic policies of Reagan and Bush. Others say global forces, such as increased foreign trade and changes in technology, which favor higher-skilled workers, are to blame.

Now, theres new evidence in favor of the global explanations. In a recent study, Steven J. Davis of the National Bureau of Economic Research and the University of Chicago argues that at the same time that wage inequality was rising in the U.S., it was also going up all across the industrialized worldin Canada, Britain, France, Japan, and West Germany. That makes it more likely that low-wage workers are being hit by worldwide changes rather than anything unique to the U.S.and less likely that even a change of administration in Washington can reverse the trend.

Before it's here, it's on the Bloomberg Terminal.