Galbraith cites a study by Chinhui Juhn, Kevin Murphy, and Brooks Pierce that separates "three distinct patterns of rising inequality, of approximately equal importance." The third is "unobserved skill," a category in the discussion of income inequality, originating in the late 60s. Can anyone explain this category a little? Galbraith calls it the "mysterious third factor," that it's "a residual unattributable to any measureable characteristic." Is anyone familiar with the study Galbraith cites? If unobserved skill isn't amenable to measurement (of what kind, I guess is the quesiton), what kind of explanatory or analytic power does it have?
-Alec
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