Earnings Inequality

Here's a link to a good "thought" essay by Gary Becker, a University of Chicago Prof. and a Nobel laureate in Economics. There is a lot of noise in the news these days about income or earnings inequality and in this essay Becker put some perspective on the issue. It's about a 5 minute read, a good investment in your economic education.

"The basic facts are these. There has been a general trend toward rising gaps between the earnings of more and less skilled persons. With regard to education, real earnings (that is, earnings adjusted for changes in consumer prices) earnings of high school dropouts did not change much. Earnings of high school graduates grew somewhat more rapidly, so that the gap between dropout and graduate earnings expanded over time.

The main action came in the earnings of college graduates and those with postgraduate education. They both increased at a rapid pace, with the earnings of persons with MBA's, law degrees, and other advanced education growing the most rapidly. All these trends produced a widening of earnings inequality by education level, particularly between those with college education and persons with lesser education."

This article was also linked to by Don Luskin. If you want to stay up on economic developments, drop by his site once a week or more often.