A new labor-saving technology will likely result in ... Group of answer choices Lower wage share of output and lower Gini coefficient in the short run. Higher wage share of output and higher Gini coefficient in the short run. Lower wage share of output and higher Gini coefficient in the short run. Higher unemployment, lower wage share of output, and higher Gini coefficient in the long run.

Question

Kathryn Ashley

Business

18 July, 18:01

A new labor-saving technology will likely result in ... Group of answer choices Lower wage share of output and lower Gini coefficient in the short run. Higher wage share of output and higher Gini coefficient in the short run. Lower wage share of output and higher Gini coefficient in the short run. Higher unemployment, lower wage share of output, and higher Gini coefficient in the long run.

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Jocelyn Downs · Answer 1

Higher unemployment, lower wage share of output, and higher Gini coefficient in the long run.

Explanation:

Since less labor will be used, total unemployment will increase. Besides less labor being used, more capital will be used, so the share of labor in total output will decrease. Labor efficiency increases, since you need less labor to produce the same or even a larger amount of output.

New technologies tend to increase the wages of high skilled labor and management. Since the Gini coefficient measures income inequality, then higher wages for a few will increase inequality.

This is an example of what is happening in the US, where highly trained labor is getting paid better every time while unskilled labor is getting paid the same as many years ago or their wage has even decreased with time. This shows how important a college education is, and the difference will only keep increasing.