Author Question: What role does human capital play in accounting for income inequality? What will be an ideal ... (Read 104 times)

cool · **on:** Jun 29, 2018

What role does human capital play in accounting for income inequality?

What will be an ideal response?

Question 2

How can incomes become more unequally distributed within countries and less unequally distributed across countries?

What will be an ideal response?

daiying98 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

In general acquiring human capital is a costly endeavor so the supply of workers with a lot of human capital is less than the supply of workers with little human capital. The difference in supply means that the more human capital an individual attains, the more income that individual will likely earn, other things remaining the same. Greater variation in human capital across the population of households increases the degree of income inequality among households. While the level of human capital attained varies across households, this factor alone does not completely explain the observed variation in income across households in the United States

Answer to Question 2

Income within nations generally has become distributed less equally. However because the average income within the poorest nations has been rising more rapidly than average income within richer nations, the world distribution of income has become more equally distributed.