Final answer:
An individual with a specialized skill earns a higher wage when the demand for that skill outpaces the supply. This is a direct consequence of the economic forces of demand and supply within the labor market, where new technology and globalization increase the demand for high-skilled labor, potentially raising wages even when educational advancements are increasing the labor supply.
Step-by-step explanation:
An individual who possesses a specialized skill that is difficult to execute will receive a higher wage only when the skill is in great demand relative to its supply. This concept is rooted in the economic principles of supply and demand as applied to the labor market. Increased education and training tend to increase the supply of high-skilled labor, potentially dampening wage growth if demand remains constant. However, factors such as new technology and globalization increase the demand for these skills, which can lead to higher relative wages. If the supply of lower skilled workers exceeds demand, then their average wages tend to decrease. This interplay of forces can result in greater income disparity as demand for skilled labor outpaces its supply.
When examining the labor market, particularly for high-skilled labor, we must consider how both demand and supply shifts impact wages. A rise in the number of individuals receiving higher education can cause the supply curve for high-skilled labor to shift right, which could lower wages if demand remains static. Yet, if global demand for these skills also increases, pushing the demand curve to the right, wages can rise, despite the increased supply, leading to higher employment levels and wages for high-skilled workers.