Wages for low-skilled positions are typically higher in developed countries than wages for identical positions in less-developed countries. Which of the following explains why this is the case?
I. There is a greater supply of low-skilled labor in less-developed countries.
II. There is a greater demand for low-skilled labor in developed countries.
III. There is a greater demand for low-skilled labor in less-developed countries.

Question

Quizplus · Accepted Answer

The greater supply of low-skilled labor in less-developed countries means that there is more competition for jobs, which drives down wages. In contrast, the greater demand for low-skilled labor in developed countries means there are fewer workers available to fill those jobs, leading to higher wages. Therefore, both I and II are true. Although there may be some demand for low-skilled labor in less-developed countries, it is not as high as in developed countries, so III is not a significant factor.

Wages for Low-Skilled Positions Are Typically Higher in Developed Countries