I think a highly contributing factor in employment for that phenomenon is the employers themselves. Just as a company won't pay you what you're actually worth,

I think a highly contributing factor in employment for that phenomenon is the employers themselves. Just as a company won't pay you what you're actually worth, you won't demand what you're actually worth. You as an employee will usually demand what you need to afford the things you want. If you live in India, the money needed for that is probably less. If you live in SF, the money needed for that is much more. An employee doesn't negotiate thinking about their true worth to the company. They negotiate thinking about what they need to survive comfortably in their current location. At least, this is on average. One side needs to change their way of negotiating before this becomes equal.