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Ah, OK, I see. I'm saying "the fact that Ecuadorian labour earns less than US labour doesn't matter to an Ecuadorian furniture shop owner because everything co

Ah, OK, I see. I'm saying "the fact that Ecuadorian labour earns less than US labour doesn't matter to an Ecuadorian furniture shop owner because everything costs less in Ecuador, including furniture". You're saying "labour costs are less in Ecuador relative to capital costs, so it's more affordable for business owners to hire more people instead of buy more trucks" is that right?

marcosdumay 6y ago
Yes, that's right. Getting on a tangent, the market for capital goods is much more globalized than for labor, so capital prices vary less from one place to the other. As a consequence, when everything is cheaper on some place, it usually means that labor is cheaper relatively to capital too.