Large productivity gains explain:?

Question

Large productivity gains explain:

A. increasing wage inequality.

B. the slowdown in real wage growth in the 1970s.

C. the long-term increase in real wages.

D. high unemployment in Western Europe.

E. skill-based technological change.

Answer 1

A-not necessarily large productivity gains, you need more information as to where the productivity gains are

B-productivity should increase wages

C-higher productivity creates higher wages

D-productivity gains should increase employment

E-no, skill-biased technological change explains large productivity gains

Answer: C

Answer 2

The most appealing answer from a labor stand point is answer is E. skill-based technological change.. Productivity gains can also come with technologies that are not necessarily skilled based.like for examples from the use of fuel efficient engines in cars.

But, it is true that Large productivity gains explain C. the long-term increase in real wages.

Option B is clearly wrong.

Optiona A nd D may be partly true but cannot be generalised: large productivity gains cannot fully explain A or D.