Advanced Search
MyIDEAS: Login

The Roots of Global Wage Gaps: Evidence from Randomized Processing of U.S. Visas

Contents:

Author Info

  • Michael Clemens

Abstract

This study uses a unique natural experiment to test a simple model of international differences in workers’ wages and productivity. Large differences in wages across countries could arise from several sources. These include barriers to trade in outputs, differences in technology, differences in workers, or differences in the other factors of production accessible in different countries. To measure the relative importance of these sources in one setting, this study exploits the randomized processing of U.S. visas for a group of Indian workers who produce software within a single multinational firm. In this setting, international barriers to trade in outputs, barriers to technology transfer, and all observable or unobservable differences between workers are extremely low. The results indicate that location outside of India causes a sixfold increase in the wages of the same worker using the same technology to produce a highly tradable good. Under plausible assumptions about competition in the industry, this suggests that country-of-work by itself is responsible—in this industry—for roughly three-quarters of the gap in productivity between workers in India and workers in the richest countries. These findings have implications for open questions in labor, growth, international, and development economics.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cgdev.org/content/publications/detail/1424188/
Download Restriction: no

Bibliographic Info

Paper provided by Center for Global Development in its series Working Papers with number 212.

as in new window
Length: 44 pages
Date of creation: Jun 2010
Date of revision:
Handle: RePEc:cgd:wpaper:212

Contact details of provider:
Web page: http://www.cgdev.org

Related research

Keywords: growth; economic development; wealth of nations; productivity; migration; lottery; information technology; wage differences; poverty; income distribution; human capital; spatial differences; agglomeration; price equivalent; tariff equivalent; labor mobility; location; high tech; software; technology;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. John Gibson & David Mckenzie, 2010. "The Economic Consequences of ‘Brain Drain’ of the Best and Brightest: Microeconomic Evidence from Five Countries," Working Papers in Economics 10/05, University of Waikato, Department of Economics.
  2. John Gibson & David McKenzie, 2013. "Scientific Mobility and Knowledge Networks in High Emigration Countries: Evidence from the Pacific," Working Papers in Economics 13/02, University of Waikato, Department of Economics.
  3. Gharad Bryan & Shyamal Chowdhury & A. Mushfiq Mobarak, 2011. "Seasonal Migration and Risk Aversion," Working Papers id:4650, eSocialSciences.
  4. de Brauw, Alan & Mueller, Valerie & Woldehanna, Tassew, 2011. "Insurance motives to remit: Evidence from a matched sample of Ethiopian internal migrants," IFPRI discussion papers 1090, International Food Policy Research Institute (IFPRI).
  5. John Gibson & David McKenzie & Halahingano Rohorua, 2013. "Development Impacts of Seasonal and Temporary Migration: A Review of Evidence from the Pacific and Southeast Asia," CReAM Discussion Paper Series 1308, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  6. de Brauw, Alan & Mueller, Valerie & Woldehanna, Tassew, 2013. "Motives to Remit: Evidence from Tracked Internal Migrants in Ethiopia," World Development, Elsevier, vol. 50(C), pages 13-23.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cgd:wpaper:212. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Roodman).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.