ONE factor behind the rise of income inequality in America over the past four decades is that the labour market has increasingly favoured the well-educated. Real wages for college graduates have risen by over a third since 1963, whereas wages for those without high-school diplomas have dropped. As more of the economy becomes automated, doomsayers worry that the gap between the haves and the have-nots will only grow. History shows, however, that this need not be so.
The recent rise in earnings for skilled workers is a rare historical phenomenon. Compiling records from churches, monasteries, colleges, guilds and governments, Gregory Clark, an economist at the University of California, Davis, has put together a comprehensive dataset of English wages that stretches back to the 13th century. Mr Clark notes that in the past the skilled-wage premium, defined as the difference in wages between craftsmen, such as carpenters and masons, and unskilled labourers has been fairly stable,…Continue reading