A Quantitative Look at How Technology Drives Wage Inequality

    As people graduate high school every year, students decide their next big step.  Some choose to go to college and further their education, others may decide to enter the workforce immediately.  Their decisions affect the economy directly and contribute to the increasing wage inequalities in the workforce between the skilled and unskilled workers.  The wage inequality has increased (especially since the 1980s).  Currently, college graduates make almost double the wage of those that entered the workforce with a high school diploma alone.  The number of college graduates has increased and in economic theory it was expected that their relative wages would not continue to increase as well.  The article I found has studied the above premise.

     Within the article, researchers focused on information technology concerning equipment and software occupations that need workers with technical skills.  The researchers created a model in which the production of new capital equipment was compared to the quantitative technological changes on wage inequalities and skill formation.  They came to the conclusion that if technology alone was viewed according to the change in technology in the equipment and software sector; The skilled workers were benefited in an unequal manner than the unskilled workers.  The results accounted for a huge portion of the wage inequality.

      In conclusion, it is plausible that education and various technology software within college programs attribute to the wage inequality.  Even though there are a higher supply of college students and it doesn't seem like their wages would continue to increase, technology is increasing at such a rate that skilled workers are needed to keep up with it.  Enforcing higher wages among those more educated compared to having a high school diploma boils down to basic economics surprisingly.  Increasing software and technology equipment requires more skill to keep up with its evolving status.  Even though there is a surplus of college graduates, their wages will continue to increase with the growing technology (even though economists expected a decrease in wage).  The article makes me feel a little less skeptical about a college education and more reassured that continuing education will get someone more bang for their buck.