The real question raised in this blog is actually why we allow capital to move and not labour. People who are wondering why living standards in the West have un

The real question raised in this blog is actually why we allow capital to move and not labour. People who are wondering why living standards in the West have underperformed productivity should take a look at that question. Of course he's right about location based pay, too. The thing that ties it together is negotiating position. Chances are if you're a firm that many of your employees will in fact be OK, implicitly or explicitly, to share the gains from relocating to a cheaper area with your company. If you move to a place where you have 20K lower expenses, it's reasonable to think you'll share some of that with your employer, if only because you find it inconvenient to find a new one. It is of course true that you're as useful to the company as before, but it's a poker game. It's perfectly fine for you to insist on the same pay, but you'll have to run the gauntlet of your employer calling your bluff. I foresee more movement on this issue. Different firms will try different policies, and different employees will try different jobs. We'll get some moves to read about shortly, once this has played out a bit. One thing is for instance simply representing you live somewhere other than where you spend your time. Someone is going to find a friend in central London, NYC, or SF, and swap addresses with them. For instance if I live with my family in the suburbs, I could "swap" with some younger person living in town centre, and give them a piece of the action instead of my employer.