Finite Labor Supply in India
By Arnold Kling
Anti-outsourcing alarmists say that India has an “infinite supply of cheap labor.” If that were true, then we would not be reading stories like this.
According to a Nasscom Hewitt Total Rewards Survey 2003, the entry level salary (junior software engineer) is up an average 24% to Rs 267,000 from 217,000 in 2002.
Thanks to a reader for the story tip. Outsourcing continues to be one of the top economic stories of the year. See Daniel Drezner’s recent post. However, my guess is that over the next 18 months, we will either see a stronger U.S. labor market, a slowdown in outsourcing due to higher wages in India, or both. Most of all, we will see the end of election season. Being a free trader in an election year is like being a turkey a month before Thanksgiving.
For Discussion. When Council of Economic Advisers Chairman Greg Mankiw said that outsourcing is not different from other forms of trade, there were calls for his resignation. If President Bush were forced to hire a chief economic adviser who opposes outsourcing, who might he pick?