Buy Essay Affect of Capital Flow on Wage Differentials
Capital Flow has a significant effect on both wage differentials and labor migration. For example, many jobs in the United States have been outsourced to other countries because it was discovered that the cost of moving an entire operation was cheaper than paying the normal wages for that position.
Many countries have significantly lower wages than the United States. The flow of products has a similar effect on wage differentiation and labor mobility as capital flow. While the US is a huge importer, other countries focus on their exports, which bring money into the country. Capital, product, and labor mobility all work together to affect the allocation of resources. Jobs are created where the products are being made, and labor will migrate to where the jobs are.