Bela Balassa

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He was an important thinker on exchange rates, and explained why life was in some important ways cheaper in poor countries.

 

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I think the difference is that Baumol refers to different sectors in the same economy (why does a Norwegian barber salary rise when the Norweign oil sector becomes more efficient?) while Balassa is the same sector in different economies (why is a Norwegian barber paid more than a Mexian barber?).

Thanks. That's what I thought, too. It remains unclear to me, however, why don't we call it International Baumol Effect or something like that.

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I haven't studied the issue, but high levels of income inequality in the population could possibly contribute. The prevailing wage for low skilled service would be within the means of the middle class. Hong Kong has one of the highest gini coefficients. https://www.cia.gov/library/publications/the-world-factbook/rankorder/21...

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Ok, HK is not a country! Maybe there are better examples.

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