Wage Rates Across The World Are A Function Of The Productivity Of The Economy

This post summarizes the Presidential Address delivered by Orley Ashenfelter at the American Economic Association annual meeting in Chicago.  Ashenfelter compared wages for workers doing similar work in McDonald's restaurants in 60 countries.  Wages in the more productive western economies were much higher for the same work than in most other countries.  They were related to the productivity levels of each economy.  Skill, talent and effort had nothing to do with the different wage rates. One's wages and standard of living depend upon the output per hour of the economy in which one lives.