Final answer:
Technology complements high-skill labor by making it more productive, causing a rightward shift in the demand curve for such labor. In contrast, technology can replace low-skill labor, resulting in a leftward shift of the demand curve for these jobs. This trend increases wage inequality.
Step-by-step explanation:
As the technology complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right. The market for high-wage labor is influenced by information technology, which increases the productivity of high-wage workers and allows them to handle more tasks, thus raising the demand for such labor. On the contrary, in the market for low-wage labor, technology often substitutes for jobs that low-skill workers perform, like telephone or bookkeeping roles, pushing the demand for low-wage labor to the left as companies can also manage offshore connections more efficiently.
This dynamic leads to a divergence in wages and potentially increased inequality, as the wages for low-skill labor decrease while those for high-skill labor rise. For example, new technologies in fields like network administration elevate the demand for high-skill labor. Meanwhile, automation and global connectivity suppress the demand for low-skill labor in developed countries such as the United States.