If the dollar cost of labor in a developing country is 50% less than in the U.S. and the productivity of that labor is equal to productivity in the U.S. than that labor is really more expensive than U.S. labor.

Question

Quizplus · Accepted Answer

Even though the dollar cost of labor is 50% less in the developing country, if the productivity of that labor is equal to the productivity in the U.S., the labor is actually cheaper in the developing country when considering cost relative to output.

If the Dollar Cost of Labor in a Developing Country