HIGH-WAGE COUNTRY

A country in which the per capita wage is high compared to the world average per capita wage. The criterion used to evaluate this income is the hourly wage rate.

World economies can be divided into three categories based on the level of wages per capita: low wage economies (most of Sub-Saharan African countries, Burundi, Ethiopia, Mali, Burkina Faso, etc.), medium wage economies (lower medium in Peru, Bolivia, Korea, Central and Eastern Europe), and high wage economies (Western Europe, the Unites-States, Japan, etc.).

Wage Rate vs. Labour Cost

Wage rates per unit of time are not the same as labour costs per unit of output. When workers are paid twice as much per hour and produce three times as much per hour, the labour costs per unit of output are lower.

"It can be shown that high-wage countries usually have high productivity and favourable costs per unit produced, which, despite the higher labour costs, do not hinder their export competitiveness."
(International Labour Organization (ILO), Active Labour Market Policies, 2003, visited 2011-01-11)

Businesses tend to move from high-wage countries to low-wage countries, depressing wages in the former and increasing wages in the latter. In high-wage countries, businesses specialize in producing capital-intensive goods, and in low-wage countries, they specialize in labour-intensive goods.