Answer to Question #237782 in Microeconomics for hope

Question

apart from the mismatches of supply and demand in the labor market what other factors are largely contributing to inequality levels within the country

Answer 1

Solution:

The other factors that are largely contributing to inequality levels within the country include the following:

1.     Technological changes - The digital advancements have created enormous wealth for those with the skills but on the other hand, eliminated low-skilled workers in the process, hence creating a huge gap.

2.     Globalization – Competition from rising economies coupled with reduced trade barriers have further reduced the prospects of other country's workers without advanced skills. It has also greatly affected low-skilled workers in the process.

3.     Decline in organized labor – There has been a significant decline in the number of labor unions representing workers. Therefore, this has shrunk their power to bargain for higher wages and benefits.

4.     Changing policies – The policies adopted by a country such as tax laws that favor the wealthy and infringe on the poor can result to huge gaps.

5.     Education levels – Lack of education in population and especially workers of a country can create inequalities in terms of income and wages