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What is global labor arbitrage?

Global labor arbitrage is an economic phenomenon where, as a result of the removal of or disintegration of barriers to international trade, jobs move to nations where labor and the cost of doing business (such as environmental regulations) is inexpensive and/or impoverished labor moves to nations with higher paying jobs.

What is on-shore labor & offshoring arbitrage?

The practice of on-shore labor and offshoring arbitrage is the combined practice of underpaying immigrant labor to suppress wages and mobility of both immigrant and native labor — while sending non-competitive jobs offshore to increase profits. Global labor arbitrage can take many forms, including but not limited to:

How does domestic labor arbitrage reduce shipping costs?

Likewise, by moving production where the raw materials are (or closer), the company reduces shipping costs. Through domestic labor arbitrage (also called onshoring or nearshoring), a company keeps jobs in a wealthy country but relocates them to an area with a lower cost of living, reducing their costs.

Where does the word arbitrage come from?

The word arbitrage, which relates to the French word for "refereeing," comes into English-language business-labor circles from its application in the financial world.

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