The article
talks about how globalization brought on inequality. When you look back through
China’s history, you can notice a large change from 1980, when the average
income was $200 U.S. dollars. In 2013 the average income for China was nearly
$7,000 U.S. dollars. China’s Gini index has grown from .3 to .45. The Gini
index is a measure of income distribution where 0 is perfect equality and 1 is
perfect inequality. Before globalization countries had to hone the skills they
already had and had to deal with the lack of other skills or teaching others
how to do it. After globalization, countries could easily trade workers who
were in high demand for workers that the country needed in their own job
locations. Eric Maskin and Michael Kremer tried to create a theory named
“Skills Matching” but realized that their model just helped to explain the
upheavals of globalization. The explanation is of how globalization interacts
with inequality begins with groups of workers. There are four groups of
workers: high- and low-skilled in developed countries, and high- and
low-skilled in developed countries.
I believe
that Maskin and Kremer were on to something when they started to make this
theory. I believe that the inequality is based off of the fact that the
countries would trade their good skilled workers and trade those workers for
other skilled workers. The lower skilled workers would be unable to be trade
until they were trained better and that was not easy to be done because the
workers they needed were already there. Lower skilled workers did not need the
training because they just were not needed. There was very little incentive to
have them trained, so this caused a negative result in the long run. After
labeling the problem, Maskin asked a great question and I ask it too. “Now that
we know this problem, how do we tweak this system so that the inequality is
changed?”
Elizabeth Causby
Friday February 20, 2015
6:18pm
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