CitationAshenfelter, Orley & Jurajda, Štepán (2004). Cross-country comparisons of wage rates: the Mcwage index. Princeton University and CERGE-EI Working Paper.
AbstractComparisons of wage rates across countries have become key ingredients in evaluating theories of international trade or the success of economic reforms. Yet, it is widely agreed that no credible, comparable wage estimates exist. This paper suggests a simple procedure for comparing the average wage rate of workers in identical jobs in different countries. The procedure is implemented with new data on wage rates in McDonald's restaurants in 27 countries that are at dramatically different stages of economic development. The results indicate that US$ wages for identical jobs in the U.S., Japan, and Western Europe are some four to five times
higher than in Eastern Europe, Korea, or Brazil, and an order of magnitude higher than in China, India, or Colombia. We demonstrate the use of the new wage measure in several strands of economic literature, including the assessment of cross-country differences in the level of output.
Reference TypeJournal Article
Journal TitlePrinceton University and CERGE-EI Working Paper