For background, read the article "Fruit pickers: 'The money we earn is not worth getting out of bed for'" (http://goo.gl/MCQcC). This article apparently has very little to do with economic growth theories. However, it offers an excellent opportunity to better understand some important aspects of economic growth and development. Fruit picking is one area where technological progress is slow or nonexistent. For instance, strawberry-picking robots are still far from taking the jobs of the thousands of workers employed in the field. Suppose a worker is paid the minimum wage, which is, let's say $8 in the UK and $3 in Bulgaria. Suppose a worker in the UK is able to pick 10 kilos of strawberries in one hour, the same as a worker in Bulgaria. Suppose all strawberries picked in the UK and Bulgaria are exported to countries such as Norway, where they sell for $10 a kilo.
a) Where does a fruit-picking worker have higher productivity, in the UK or in Bulgaria? Why are they paid different wages?
b) British people complain that foreign immigrants "steal" their jobs. Why would a British worker not want to take such a job? Why would an employer in the UK wish to hire a Bulgarian worker instead of a British one? More generally, why do developed countries tend to "export" low-productivity jobs? Does this reduce the standards of living in the developed countries?

Question

Quizplus · Accepted Answer

The Answer of For background, read the article "Fruit pickers: 'The money we earn is not worth getting out of bed for'" (http://goo.gl/MCQcC). This article apparently has very little to do with economic growth theories. However, it offers an excellent opportunity to better understand some important aspects of economic growth and development. Fruit picking is one area where technological progress is slow or nonexistent. For instance, strawberry-picking robots are still far from taking the jobs of the thousands of workers employed in the field. Suppose a worker is paid the minimum wage, which is, let's say $8 in the UK and $3 in Bulgaria. Suppose a worker in the UK is able to pick 10 kilos of strawberries in one hour, the same as a worker in Bulgaria. Suppose all strawberries picked in the UK and Bulgaria are exported to countries such as Norway, where they sell for $10 a kilo.
a) Where does a fruit-picking worker have higher productivity, in the UK or in Bulgaria? Why are they paid different wages?
b) British people complain that foreign immigrants "steal" their jobs. Why would a British worker not want to take such a job? Why would an employer in the UK wish to hire a Bulgarian worker instead of a British one? More generally, why do developed countries tend to "export" low-productivity jobs? Does this reduce the standards of living in the developed countries?

For Background, Read the Article "Fruit Pickers: 'The Money We