From about 1930 to 1970, the typical college graduate in the United States earned about 40 percent more than the typical high school graduate, while the typical high school graduate earned some 40 percent more than the typical high school dropout. These premiums have doubled to between 70 percent and 80 percent. The reasons are not completely clear. Economic studies are fairly convincing that it is not just because this is an increasingly competitive world with low-skilled jobs being exported to Asia and other poorer countries. Although that is happening, the major determinant seems to be technology.
Computers are one example.
Knowledge is power in the modern world. The same general trends that I indicated for the United States are found in Western Europe. Lack of human capital development tends to show up more in Europe in increasing unemployment. In 1980, United States unemployment was much above that in Germany, France, Sweden, and many other Western European countries. There has been a complete reversal since then.