Education and innate ability:

It is commonly accepted that there is a positive correlation between an individual's education, innate ability, charisma and their relative income and wealth. This implies that these abilities are a necessity or at least in demand in the labor market relative to their supply. Due to the relative shortage of these skills in the labor market, the skills are rewarded in the form of higher wage rates.

Thus, in the labor market a high degree of education is rewarded in the form of higher wages due to the relative shortage of highly skilled individuals. In parallel those who haven't undertaken such a high education, perhaps due to affordability or a lack of innate ability receive significantly lower wages. Over the past 30 years and the increase in individuals undertaking higher education, there has been a significant increase in wage inequality. This is arguably no coincidence; there has been a massive increase in the demand for a high degree of education in the labor market in ever increasing technological industries. Whilst education is rewarded with higher pay, it is leaving those with lower levels of education receiving much lower relative wages, which leads to greater inequality. This  is worsened with the increase in employers demanding a high degree of education from employees that has led to uneducated workers having to work lower paid, basic jobs in many industry sectors, thus receiving lower wages and worsening wage inequality further. ⁽⁵⁾

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