CEA on the Income Distribution
Gary Becker expressed a similar view on his blog a couple weeks ago.
Over the last 25 years, the wages of the skilled have continued to grow faster than the wages of the less skilled. For example, the wages of the college-educated have grown by 22% since 1980, while the wages of high-school drop-outs has fallen by 3%.
This does not mean, however, that the rich are benefiting at the expense of the poor. Instead, it means that the return to investing in education and training continues to grow. Most economists believe that the increased divergence between the wages of the skilled and the unskilled reflects technological advancements that make workers' skills more valuable. Having an economy that places a greater value on skills and education is a good thing. Our economy can grow more quickly when the returns to investment are high, and human capital investment is the most important form of investment.