Gary Becker and Kevin Murphy, two of the best minds in labor economics, contributed an article on the cause of rising income inequality in the US in the latest issue of The American, read it here.
Becker and Murphy attribute the rising income gap as an outcome of the increasing demand for skilled labor (with skilled labor defined as those who get more years of schooling). As I am a believer of the signalling theory of education, the puzzle is why there is a surge in the demand for more signalling among job seekers? Is it the changing structure of the economy (computer, internet...service sector growth in general)? What is so special about an investment bank job or a computer coding job which requires more signalling on the part of job seekers' type compared with say a car manufacturing job in Detriot? I don't have the answer, do you?