Publication

This study uses a unique natural experiment to test a simple model of international differences in workers’ wages and productivity. Large differences in wages across countries could arise from several sources. To measure the relative importance of these sources in one setting, this study exploits the randomized processing of US visas for a group of Indian workers who produce software within a single multinational firm. The results indicate that location outside of India causes a sixfold increase in the wages of the same worker using the same technology to produce a highly tradable good.