A Critique of the Global Wage System

It is widely believed that international wage differences are a result of international productivity differences. That belief has been criticized by various economists for the differential in wages being much higher than in productivity. Another criticism has been that productivity increases in developing countries have tended to lead to lower world prices for their products and services, rather than to higher wages for their workers. The thesis of this article is that international wage differences are, to a large extent, caused by discrimination, rather than by productivity differences.