The relative wage of unskilled workers has fallen in the United States likely as a result of a relative a. increase in the number of unskilled workers available due to immigration into the United States b. decrease in the demand for unskilled workers because workers are more inadequately educated c. decrease in the demand for unskilled workers because of skill-biased technological change and increases in international trade d. increase in the number of unskilled workers available because workers are more inadequately educated

1. We start with the basic supply-and-demand framework for the labor market. The relative wage of unskilled workers depends on the relative supply \( L_U \) and relative demand \( D_U \) for unskilled labor. 2. An increase in the supply of unskilled labor (e.g., due to immigration) would tend to reduce the relative wage. This mechanism is described by a rightward shift in the supply curve: \[ \text{New Supply: } L_U' > L_U \] However, this is only one possible explanation. 3. Skill-biased technological change involves the adoption of technologies that complement skilled workers while substituting for unskilled workers. This leads to a relatively lower demand for unskilled workers: \[ \text{New Demand: } D_U' < D_U \] Moreover, increases in international trade have also been associated with a decline in the demand for unskilled labor in certain industries because of comparative advantages shifting production overseas. 4. Combining these factors, a decrease in the demand for unskilled workers (due to both technological change and international trade) is a strong explanation for why the relative wage of unskilled workers has fallen. 5. Therefore, the correct answer is: c. decrease in the demand for unskilled workers because of skill-biased technological change and increases in international trade