labor arbitrage

Labor arbitrage refers to the practice of taking advantage of differences in labor costs between countries or regions. Companies may outsource jobs to places where wages are lower, thus reducing their overall expenses. This allows businesses to maintain profitability while accessing skilled labor. For example, a company might hire software developers in a country with lower wages instead of paying higher salaries domestically. While this can lead to cost savings for companies, it often raises concerns about job losses and wage stagnation in higher-cost locations.