Relative Demand of Skilled Labor
One of the factors that increases the relative demand for skilled labor is attributed to the introduction of computers. In order to operate computers, workers must build up their human capital in order to learn how such a piece of machinery works. Thus, there is an increase in the demand for skilled labor. In addition to the technological change of computers, the introduction of electricity also replaces man power (unskilled labor) which, in turn, also shifts out the demand curve.
Technology, however, is not the only factor. Trade and the effects of globalization also play a role in affecting the relative demand of skilled labor. One case includes a developed country purchasing imports from a developing country, which in turn replaces products made with domestic low-skilled labor. This, in turn, decreased the demand for low-skilled workers. Both of these factors, thus, increase the wages of highly skilled workers.
Read more about this topic: Skill (labor)
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