Photo by Russ Campbell

Photo by Russ Campbell

The pandemic dramatically accelerated the global marketplace’s appetite for remote work, which had already become a $50 billion industry by 2020. But wages for the same remote jobs varied greatly, depending on where the worker lived.

That’s one of the critical findings in Associate Professor Alberto Cavallo’s paper, “The International Price of Remote Work.” Using a data set from 2019 to 2021 from one of the largest web platforms, Cavallo and coauthors Agostina Brinatti, Javier Cravino, and Andres Drenik found that a country’s gross domestic product largely informed wage levels for comparable work.

“We didn’t expect to find such large differences for jobs that are essentially exactly the same and that can be performed from anywhere,” Cavallo says. “These are jobs that require very little initial capital—just a computer or even your phone. But if you look, for example, at remote wages for Indian workers, they are about a third of the wage that American workers get for exactly the same jobs. What seems to be happening is that employers are setting the wage in a way that takes into account the conditions remote workers are also facing in their local markets.”

The wage disparity was significant within the United States, where, for example, remote workers living in Mississippi are paid about a third less than their peers in Massachusetts. This was particularly surprising for jobs that can be done well remotely, such as interior designer and mobile developer, to name two. Cavallo’s research also measured “offshorability” across occupations; those that require specialized local knowledge are more difficult to perform remotely, he found.

Cavallo hopes to dig deeper over time, with particular interest in how wages and remote work evolve as the pandemic subsides.

“There are a lot of things we cannot directly observe, and our hope is to collect complementary data to explore that,” he explains. “Over time, as we continue to collect data, we will be able to see how this plays out, dynamically, as many firms become more adept at working with remote workers.”

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