American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Why Do Programmers Earn More in Houston Than Hyderabad? Evidence from Randomized Processing of US Visas
American Economic Review
vol. 103,
no. 3, May 2013
(pp. 198–202)
Abstract
Why do workers earn so much more in the United States than in India? This study compares the earnings of workers in the two countries in a unique setting. The product is perfectly tradable (software), technology differences are nil (they are members of the same work team), and the workers are identical in expectation (those who enter the United States are chosen by natural randomization). The results suggest that output tradability, technology, and human capital together explain much less than half of the earnings gap. Location itself may have large effects on individual workers' wages and productivity, for reasons poorly understood.Citation
Clemens, Michael A. 2013. "Why Do Programmers Earn More in Houston Than Hyderabad? Evidence from Randomized Processing of US Visas." American Economic Review, 103 (3): 198–202. DOI: 10.1257/aer.103.3.198Additional Materials
JEL Classification
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J61 Geographic Labor Mobility; Immigrant Workers
- L86 Information and Internet Services; Computer Software
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration