Globalization and skill-biased technological change have contributed to:?

Question

Globalization and skill-biased technological change have contributed to:

A. the long-term growth in real wages.

B. the slowdown in productivity since 1973.

C. increasing wage inequality.

D. high rates of employment in Western Europe.

E. diminishing returns to labor.

Answer 1

It is impossible to answer this question in a non-normative response!

I would go with C. though, ceteris paribus.

Answer 2

C, increasing inequality.  Globalization, according to the factor produtions model, favors the abundant factor (in the US's case, skilled workers) and harms the scarce factor (unskilled workers.)  Technology tends to increase the productivity of skilled workers more than unskilled, so skilled workers get more compensation.