The United Nations Asks You to Help It Understand the Causes

Essay

The United Nations asks you to help it understand the causes of income disparities around the world. You develop the following two hypotheses. Test each hypothesis against the given facts, identify which fits the facts better, and offer a theory based on your observation.
I. Countries with high populations have lower incomes because the large supply of labour drives down the wage rate.
II. Countries with high literacy rates have higher incomes because labour is more productive.

Source: CIA World Factbook http://www.odci.gov/cia/publications/factbook/index.html