Friday, September 23, 2011

Rajan on income inequality caused by technology and globalization

I mentioned in a previous blog post Raghuram Rajan's analysis on income inequality that has been articulated in his book and blog Fault Lines. Here is the chart as a reminder:


And here is the takeaway (for me) in the form of a 2 x 2 matrix (beloved by those in the consulting field) from a speech he made in Toronto on Tuesday, September 20:


The case for higher structural unemployment --think of the widening gap between official and U6 unemployment-- is in the left column of the matrix.

The "routine" skilled work has been displaced by technology and the "routine" unskilled work has been shipped off shore thanks to the corporate globalization model.

Those of us in the west are in an ever losing battle to stay ahead of the technology cycle so that our jobs remain "non-routine" and preferably "skilled".