WASHINGTON -- Former Federal Reserve chairman Alan Greenspan said allowing more skilled immigrants to work in the United States would help keep the income gap from widening.
Inequality of incomes is the "critical area where capitalist systems are most vulnerable," Greenspan said yesterday in Washington at a conference on maintaining the competitiveness of US capital markets convened by Treasury Secretary Henry Paulson. "You cannot have a system that we have unless the people who participate in it believe it is just."
Allowing more skilled workers into the country would bring down the salaries of top earners in the United States, easing tensions over the mounting wage gap, Greenspan said.
"Our skilled wages are higher than anywhere in the world," he said. "If we open up a significant window for skilled workers, that would suppress the skilled-wage level and end the concentration of income."
Income inequality has risen in the past three decades.
Kathleen Newland, director of the Migration Policy Institute, a Washington think tank, said she was skeptical of Greenspan's proposal. "In theory, increased skilled immigration should help contain wage rises at higher levels, but there is little empirical evidence," she said. "If you want to reduce political concern, it would be better to deal with the problem by helping to raise the wages of the lowest earners, by helping to improve productivity and raising the minimum wage."