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Strategies & Market Trends : ahhaha's ahs

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To: ahhaha who wrote (318)	10/20/2000 1:00:21 PM
From: gpowell	Read Replies (2) of 24758

How does one define "unskilled"? I don't have an exact definition of unskilled labor. In the context of Krugman’s argument, unskilled labor is anyone displaced by automation. Have wages of skilled workers declined due to automation? Apparently not, but they should since automation increases the productivity for all workers, not just industrial workers, the net effect ceteris paribus would be a lowered demand for all labor. Since rates for skilled labor have risen (according to Krugman), the need to create, maintain, and run the new automation must have shifted (increased) the demand curve for skilled labor, which more than compensates for the demand lowering effect of greater productivity. Unfortunately for the industrial worker, there is no compensatory factors to soak up their increased supply. Consequently, income inequality widens simply because of supply and demand.

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