Advanced Search

Journal Navigation

Journal Home

Subscriptions

Archive

Contact Us

Table of Contents

CiteULike is a free service for managing and discovering scholarly references - click here to get started.

Sign In to gain access to subscriptions and/or personal tools.
Review of Radical Political Economics
This Article
Right arrow Full Text (PDF)
Right arrow All Versions of this Article:
0486613408319919v1
40/3/228    most recent
Right arrow References
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Alert me to new issues of the journal
Right arrow Add to Saved Citations
Right arrow Download to citation manager
Right arrowRequest Permissions
Right arrow Request Reprints
Right arrow Add to My Marked Citations
Citing Articles
Right arrow Citing Articles via Google Scholar
Right arrow Citing Articles via Scopus
Google Scholar
Right arrow Articles by Larudee, M.
Right arrow Articles by Koechlin, T.
Right arrow Search for Related Content
Social Bookmarking
Add to CiteULike   Add to Complore   Add to Connotea   Add to Del.icio.us   Add to Digg   Add to Reddit   Add to Technorati   Add to Twitter  
What's this?

Low-wage Labor and the Geography of Production: A Qualified Defense of the "Pauper Labor Argument"

Mehrene Larudee

International Studies Program, DePaul University, 990 W. Fullerton, Room 4100, Chicago, IL 60614, mlarudee{at}depaul.edu

Timothy Koechlin

Department of Economics, Vassar College, Poughkeepsie, NY 12604, tikoechlin{at}vassar.edu

Does dismantling barriers to moving production offshore mean that jobs will actually flee to low-wage countries? The labor movement says yes, but many mainstream economists reject this "pauper labor argument," insisting that wages are low only where productivity is low, and so low wages do not motivate firms to relocate. We argue that this mainstream view is wrong both empirically and theoretically. The available data strongly suggest that unit labor costs (ULCs) differ widely among countries, and ULCs appear on average to be lower in poor countries. We argue, further, that low wages are indeed an independent source of competitiveness, because firms often carry a significant portion of their productivity with them, allowing them to achieve ULCs in the host country below the existing average there. We also comment on Harrison and McMillan's (2006) paper on these issues, and sketch an alternative framework for analyzing relationships among wages, productivity, and the relocation of production.

Key Words: unit labor cost • FDI • capital mobility • productivity • offshore

This version was published on September 1, 2008

Review of Radical Political Economics, Vol. 40, No. 3, 228-236 (2008)
DOI: 10.1177/0486613408319919
Add to CiteULike CiteULike   Add to Complore Complore   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us   Add to Digg Digg   Add to Reddit Reddit   Add to Technorati Technorati   Add to Twitter Twitter    What's this?