Working Paper: NBER ID: w29437
Authors: Agostina Brinatti; Alberto Cavallo; Javier Cravino; Andres Drenik
Abstract: We use data from a large web-based job platform to study how the price of remote work is determined in a globalized labor market. In the platform, workers located around the world compete for jobs that can be done remotely. We document that, despite the global nature of the marketplace, the worker’s country accounts for almost a third of the variance in remote wages. The observed wage differences are strongly correlated to the GDP per capita in the worker’s location. This correlation is not accounted for by differences in workers’ observable characteristics, occupations, or differences in the employers’ locations. Instead, data on wage-histories indicate that remote wages are partly determined by the conditions that workers face in their local labor markets. We also document that, as with internationally traded goods, remote wages expressed in local currency move strongly with the dollar exchange rate of the worker’s country, and are highly sensitive to changes in the wages of foreign competitors.
Keywords: No keywords provided
JEL Codes: F1; F2; F4; F6
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| local labor market conditions (J29) | remote wages (J31) |
| GDP per capita (O49) | remote wages (J31) |
| exchange rate (F31) | local currency wages (J31) |
| competitors' wages (J39) | remote wages (J31) |