CGD in the News

How much you earn depends largely on where you live (Economist)

June 22, 2018

There are several reasons why some people make more money than others. They could be brighter, or harder-working, or have rare talents. They could do jobs that pay better because they are unpleasant or dangerous. All these factors are important, but the strongest predictor of how much you earn is where you were born. 

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Part of the reason why people in the rich world earn more is that they are better-educated, which tends to make them more productive. But productivity also depends on where you work. A study by Michael Clemens and Hannah Postel of the Centre for Global Development, a think-tank, examined the wages of Haitians after their country was struck by a devastating earthquake in 2010. They found that the incomes of Haitian farmworkers who secured visas to work in America shortly afterwards rose by 1,400% compared with those who stayed in Haiti. Simply moving to a country with the rule of law, good infrastructure, sophisticated companies and so forth—ie, a rich country—made the Haitians dramatically more productive.

Read the full article here.