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In 2006 the hourly cost to employers per German industrial worker was $33. The hourly cost to employers per US industrial worker was $23.65 while the average cost per Taiwanese industrial worker was $6.38.
1. Give three reasons why firms produce in Germany rather than in a lower-wage country.
2. Germany has just entered into an agreement with other EU countries that allows people in any EU country, including Greece and Italy, which have lower wage rates, to travel and work in any EU country, including high-wage countries. Would you expect a significant movement of workers from Greece and Italy to Germany right away? Why or why not?
3. Workers in Thailand are paid significantly less than workers in Taiwanese. If you were a company CEO, what other information would you want before you decided where to establish a new production facility?
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