Explaining the Growing Inequality in Wages across Skill Levels

[...]We conclude that technological change, combinedwith overall growth in the capital stock, is the most importantfactor driving the growing wage inequality betweenlow-skilled and high-skilled workers. Increased competitionfrom abroad, both from developing and industrializedcountries, appears to explain a significant but much moremodest portion of the growing gap. A third substantialsource of growth in the wage differential is the shift indemand for the products of different industries.[...]