It is clear to me and everyone else in the world at this point you have no clue how the world works. There are some very basic economic principles you don’t understand so just for you I will briefly go over them; there are even diagrams, kinda like the pictures in your comic books but nonfictional. For everyone else skip to beginning of the wage and cost of living section for various countries you will see that North America; Canada in particular is very competitive with British and European nations for wages but in a lot of cases the cost of living is much lower.
First will be the law of diminishing RETURNS The law is central to production theory, one of the two major divisions of neoclassical microeconomic theory. The law states "that we will get less and less extra output when we add additional doses of an input while holding other inputs fixed. In other words, the marginal product of each unit of input will decline as the amount of that input increases holding all other inputs constant.
Diminishing returns and diminishing marginal returns are not the same thing. Diminishing marginal returns means that the MPL curve is falling. The output may be either negative or positive. Diminishing returns mean that the extra labour causes output to fall which means that the MPL is negative. In other words the change in output per unit increase in labour is negative and total output is falling. Mathematically it looks like this:
Substituting 3 for X and expanding yields:
A factory that has a fixed stock of capital, or tools and machines, and a variable supply of labour. As the firm increases the number of workers, the total output of the firm grows but at an ever-decreasing rate. This is because after a certain point, the factory becomes overcrowded and workers begin to form lines to use the machines. The long-run solution to this problem is to increase the stock of, capital, that is, to buy more machines and to build more factories.
Next we have aggregate demand (AD) is the total demand for final goods and services in the economy (Y) at a given time and price level [1]. It is the amount of goods and services in the economy that will be purchased at all possible price levels.[2] This is the demand for the gross domestic product of a country when inventory levels are static. It is often called effective demand, though at other times this term is distinguished. It is often cited that the aggregate demand curve is downward sloping because at lower price levels a greater quantity is demanded. While this is correct at the microeconomic, single good level, at the aggregate level this is incorrect. The aggregate demand curve is in fact downward sloping as a result of three distinct effects; Pago’s wealth effect, the Keynes’ interest rate effect and the Mundell-Fleming exchange-rate effect. An aggregate demand curve is the sum of individual demand curves for different sectors of the economy. The aggregate demand is usually described as a linear sum of four separable demand sources.
where
- is consumption (may also be known as consumer spending) = ac + bc(Y − T),
- is Investment,
- is Government spending,
- is Net export,
o is total exports, and
o is total imports = am + bm(Y − T). - In sum, for a single country at a given time, aggregate demand (D or AD) = C + Ip + G + (X-M).
- In economics, aggregate supply is the total supply of goods and services that firms in a national economy plan on selling during a specific time period. It is the total amount of goods and services that firms are willing to sell at a given price level in an economy.
In neo-Keynesian theory seen in many textbooks, an “aggregate supply and demand” diagram is drawn that looks like a typical Marshallian supply and demand diagram. The aggregate supply (AS) curve is usually drawn as upward-sloping in the short run, since the quantity of aggregate production supplied (Qs) rises as the average price level (P) rises.
There are two main reasons why Qs might rise as P rises, i.e., why the AS curve is upward sloping: - Higher prices motivate profit-seeking firms to increase output. This is because of diminishing returns and thus rising marginal costs that arise because one or more of the inputs or factors of production does not change in the short run and is assumed to be fully employed at all times. Usually this is fixed capital equipment. The AS curve is drawn given some nominal variable, such as the nominal wage rate. In the short run, the nominal wage rate is taken as fixed. Thus, rising P implies higher profits that justify expansion of output. In the neoclassical long run, on the other hand, the nominal wage rate varies with economic conditions. (High unemployment leads to falling nominal wages – and vice-versa.)
- An alternative model starts with the notion that any economy involves a large number of heterogeneous types of inputs, including both fixed capital equipment and labour. Both main types of inputs can be unemployed. The upward-sloping AS curve arises because (1) some nominal input prices are fixed in the short run (as in the neoclassical theory) and (2) as output rises, more and more production processes encounter bottlenecks. At low levels of demand, there are large numbers of production processes that do not use their fixed capital equipment fully. Thus, production can be increased without much in the way of diminishing returns and the average price level need not rise much (if at all) to justify increased production. The AS curve is flat. On the other hand, when demand is high, few production processes have unemployed fixed inputs. Thus, bottlenecks are general. Any increase in demand and production induces increases in prices. Thus, the AS curve is steep or vertical.
Aggregate Supply (AS) measures the volume of goods and services produced within the economy at a given overall price level. There is a positive relationship between AS and the general price level. Rising prices are a signal for businesses to expand production to meet a higher level of AD. An increase in demand should lead to an expansion of aggregate supply in the economy.
short-run aggregate supply curve
Aggregate supply is determined by the supply side performance of the economy. It reflects the productive capacity of the economy and the costs of production in each sector.
Shifts in the AS curve can be caused by the following factors:
- changes in size & quality of the labour force available for production
- changes in size & quality of capital stock through investment
- technological progress and the impact of innovation
- changes in factor productivity of both labour and capital
- changes in unit wage costs (wage costs per unit of output)
- changes in producer taxes and subsidies
- changes in inflation expectations - a rise in inflation expectations is likely to boost wage levels and cause AS to shift inwards
In the diagram above - the shift from AS1 to AS2 shows an increase in aggregate supply at each price level might have been caused by improvements in technology and productivity or the effects of an increase in the active labour force.
An inward shift in AS (from AS1 to AS3) causes a fall in supply at each price level. This might have been caused by higher unit wage costs, a fall in capital investment spending (capital scrapping) or a decline in the labour force.
LONG RUN AGGREGATE SUPPLY
Long run aggregate supply is determined by the productive resources available to meet demand and by the productivity of factor inputs (labour, land and capital).
In the short run, producers respond to higher demand (and prices) by bringing more inputs into the production process and increasing the utilization of their existing inputs. Supply does respond to change in price in the short run.
In the long run we assume that supply is independent of the price level (money is neutral) - the productive potential of an economy (measured by LRAS) is driven by improvements in productivity and by an expansion of the available factor inputs (more firms, a bigger capital stock, an expanding active labour force etc). As a result we draw the long run aggregate supply curve as vertical.
Improvements in productivity and efficiency cause the long-run aggregate supply curve to shift out over the years. This is shown in the diagram below
Macroeconomic equilibrium for an economy in the short run is established when aggregate demand intersects with short-run aggregate supply. This is shown in the diagram below
At the price level Pe, the aggregate demand for goods and services is equal to the aggregate supply of output. The output and the general price level in the economy will tend to adjust towards this equilibrium position.
If the price level is too high, there will be an excess supply of output. If the price level is below equilibrium, there will be excess demand in the short run. In both situations there should be a process taking the economy towards the equilibrium level of output.
Consider for example a situation where aggregate supply is greater than current demand. This will lead to a build up in stocks (inventories) and this sends a signal to producers either to cut prices (to stimulate an increase in demand) or to reduce output so as to reduce the build up of excess stocks. Either way - there is a tendency for output to move closer to the current level of demand.
There may be occasions when in the short run, the economy cannot meet an increase in demand. This is more likely to occur when an economy reaches full-employment of factor resources. In this situation, the aggregate supply curve in the short run becomes increasingly inelastic.
The diagram below tracks the effect of this. We see aggregate demand rising but the economy finds it difficult to raise (expand) production. There is a small increase in real national output, but the main effect is to put upward pressure on the general price level. Shortages of resources will lead to a general rise in costs and prices
Impact of a change in aggregate supply
Suppose that increased efficiency and productivity together with lower input costs (e.g. of essential raw materials) causes the short run aggregate supply curve to shift outwards. (I.e. an increase in supply - assume no shift in aggregate demand).
The diagram below shows what is likely to happen. AS shifts outwards and a new macroeconomic equilibrium will be established. The price level has fallen and real national output (in equilibrium) has increased to Y2.
Aggregate supply would shift inwards if there is a rise in the unit costs of production in the economy. For example there might be a rise in unit wage costs perhaps caused by higher wages not compensated for by higher labour productivity.
External economic shocks might also cause the aggregate supply curve to shift inwards. For example a sharp rise in global commodity prices. If AS shifts to the left, assuming no change in the aggregate demand curve, we expect to see a higher price level (this is known as cost-push inflation) and a lower level of real national output.
Impact of a shift in aggregate demand
In the diagram below we see the effects on an inward shift in aggregate demand in the economy. This might be caused for example by a decline in business confidence (reducing planned investment demand) or a fall in United Kingdom exports following a global downturn. It might also be caused by a cut in government spending or a rise in interest rates which leads to cutbacks in consumer spending.
The result of the inward shift of AD is a contraction along the short run aggregate supply curve and a fall in the real level of national output. This causes downward pressure on the general price level.
If aggregate demand shifts outwards (perhaps due to increased business confidence, an economic upturn in another country, or higher levels of government spending), we expect to see both a rise in the price level and higher national output.
National Income Equilibrium when Aggregate Supply is Perfectly Elastic
When short run aggregate supply is perfectly elastic, any change in aggregate demand will feed straight through to a change in the equilibrium level of real national output. For example, when AD shifts out from AD1 to AD2 (shown in the diagram below) the economy is able to meet this increased demand by expanding output. The new equilibrium level of national income is Y2. Conversely when there is a fall in total demand for goods and services (AD1 shifts inwards to AD3) we see a fall in real output.
Long Run Economic Growth
We have considered short-term changes in both aggregate demand and aggregate supply. For an economy to experience sustained economic growth over the longer run it must shift out the long run aggregate supply curve by either increasing the supply of factors of production available (e.g. an increase in the labour supply, more land and more capital inputs); increasing the productivity of those factors or the economy might increase LRAS by achieving an improvement in the state of technology.
An outward shift in the LRAS is similar to an outward shift in the production possibility frontier.
The effects are shown in the diagram below. If LRAS shifts out the economy can operate at a higher level of aggregate demand and can achieve an increase in real national output without running into problems with inflation.
One of the main long-term economic objectives of the current Labour government is to raise the economy’s productive potential and therefore provide a platform for faster economic growth in future years. For this to happen the economy needs to achieve a higher level of investment in new capital and new technology. And the quantity and productivity of the labour force also needs to increase over time.
income elasticity of demand
Income elasticity of demand measures the relationship between a change in quantity demanded and a change in income. The basic formula for calculating the coefficient of income elasticity is:
Percentage change in quantity demanded of good X divided by the percentage change in real consumers’ income
Normal Goods
Normal goods have a positive income elasticity of demand so as income rise more is demand at each price level. We make a distinction between normal necessities and normal luxuries (both have a positive coefficient of income elasticity).
Necessities have an income elasticity of demand of between 0 and +1. Demand rises with income, but less than proportionately. Often this is because we have a limited need to consume additional quantities of necessary goods as our real living standards rise. The class examples of this would be the demand for fresh vegetables, toothpaste and newspapers. Demand is not very sensitive at all to fluctuations in income in this sense total market demand is relatively stable following changes in the wider economic (business) cycle.
Luxuries on the other hand are said to have an income elasticity of demand > +1. (Demand rises more than proportionate to a change in income). Luxuries are items we can (and often do) manage to do without during periods of below average income and falling consumer confidence. When incomes are rising strongly and consumers have the confidence to go ahead with “big-ticket” items of spending, so the demand for luxury goods will grow. Conversely in a recession or economic slowdown, these items of discretionary spending might be the first victims of decisions by consumers to rein in their spending and rebuild savings and household financial balance sheets.
Many luxury goods also deserve the sobriquet of “positional goods”. These are products where the consumer derives satisfaction (and utility) not just from consuming the good or service itself, but also from being seen to be a consumer by others.
Inferior Goods
Inferior goods have a negative income elasticity of demand. Demand falls as income rises. In a recession the demand for inferior products might actually grow (depending on the severity of any change in income and also the absolute co-efficient of income elasticity of demand). For example if we find that the income elasticity of demand for cigarettes is -0.3, then a 5% fall in the average real incomes of consumers might lead to a 1.5% fall in the total demand for cigarettes (ceteris paribus).
Within a given market, the income elasticity of demand for various products can vary and of course the perception of a product must differ from consumer to consumer. The hugely important market for overseas holidays is a great example to develop further in this respect.
What to some people is a necessity might be a luxury to others. For many products, the final income elasticity of demand might be close to zero, in other words there is a very weak link at best between fluctuations in income and spending decisions. In this case the “real income effect” arising from a fall in prices is likely to be relatively small. Most of the impact on demand following a change in price will be due to changes in the relative prices of substitute goods and services.
The income elasticity of demand for a product will also change over time — the vast majority of products have a finite life-cycle. Consumer perceptions of the value and desirability of a good or service will be influenced not just by their own experiences of consuming it (and the feedback from other purchasers) but also the appearance of new products onto the market. Consider the income elasticity of demand for flat-screen colour televisions as the market for plasma screens develops and the income elasticity of demand for TV services provided through satellite dishes set against the growing availability and falling cost (in nominal and real terms) and integrated digital televisions.
price elasticity of demand
Elasticity of demand (Ped) = % change in demand of good X / % change in price of good X
- If the PED is greater than one, the good is price elastic. Demand is responsive to a change in price. If for example a 15% fall in price leads to a 30% increase in quantity demanded, the price elasticity = 2.0
- If the PED is less than one, the good is inelastic. Demand is not very responsive to changes in price. If for example a 20% increase in price leads to a 5% fall in quantity demanded, the price elasticity = 0.25
- If the PED is equal to one, the good has unit elasticity. The percentage change in quantity demanded is equal to the percentage change in price. Demand changes proportionately to a price change.
- If the PED is equal to zero, the good is perfectly inelastic. A change in price will have no influence on quantity demanded. The demand curve for such a product will be vertical.
- If the PED is infinity, the good is perfectly elastic. Any change in price will see quantity demanded fall to zero. This demand curve is associated with firms operating in perfectly competitive markets
A relatively elastic demand curve
A relatively inelastic demand curve
Factors that determine the value of price elasticity of demand
- Number of close substitutes within the market - The more (and closer) substitutes available in the market the more elastic demand will be in response to a change in price. In this case, the substitution effect will be quite strong.
- Luxuries and necessities - Necessities tend to have a more inelastic demand curve, whereas luxury goods and services tend to be more elastic. For example, the demand for opera tickets is more elastic than the demand for urban rail travel. The demand for vacation air travel is more elastic than the demand for business air travel.
- Percentage of income spent on a good - It may be the case that the smaller the proportion of income spent taken up with purchasing the good or service the more inelastic demand will be.
- Habit forming goods - Goods such as cigarettes and drugs tend to be inelastic in demand. Preferences are such that habitual consumers of certain products become de-sensitised to price changes.
- Time period under consideration - Demand tends to be more elastic in the long run rather than in the short run. For example, after the two world oil price shocks of the 1970s - the “response” to higher oil prices was modest in the immediate period after price increases, but as time passed, people found ways to consume less petroleum and other oil products. This included measures to get better mileage from their cars; higher spending on insulation in homes and car pooling for commuters. The demand for oil became more elastic in the long-run.
price elasticity of supply
Price elasticity of supply measures the relationship between change in quantity supplied and a change in price. The formula for price elasticity of supply is:
Percentage change in quantity supplied / Percentage change in price
The value of elasticity of supply is positive, because an increase in price is likely to increase the quantity supplied to the market and vice versa.
FACTORS THAT DETERMINE ELASTICITY OF SUPPLY
The value of price elasticity of supply is positive, because an increase in price is likely to increase the quantity supplied to the market and vice versa. The elasticity of supply depends on the following factors:
SPARE CAPACITY
How much spare capacity a firm has - if there is plenty of spare capacity, the firm should be able to increase output quite quickly without a rise in costs and therefore supply will be elastic
STOCKS
The level of stocks or inventories - if stocks of raw materials, components and finished products are high then the firm is able to respond to a change in demand quickly by supplying these stocks onto the market - supply will be elastic
EASE OF FACTOR SUBSTITUTION
Consider the sudden and dramatic increase in demand for petrol canisters during the recent fuel shortage. Could manufacturers of cool-boxes or producers of other types of canister have switched their production processes quickly and easily to meet the high demand for fuel containers?
If capital and labour resources are occupationally mobile then the elasticity of supply for a product is likely to be higher than if capital equipment and labour cannot easily be switched and the production process is fairly inflexible in response to changes in the pattern of demand for goods and services.
TIME PERIOD
Supply is likely to be more elastic, the longer the time period a firm has to adjust its production. In the short run, the firm may not be able to change its factor inputs. In some agricultural industries the supply is fixed and determined by planting decisions made months before, and climatic conditions, which affect the production, yield.
Economists sometimes refer to the momentary time period - a time period that is short enough for supply to be fixed i.e. supply cannot respond at all to a change in demand.
ILLUSTRATING PRICE ELASTICITY OF SUPPLY
When supply is perfectly inelastic, a shift in the demand curve has no effect on the equilibrium quantity supplied onto the market. Examples include the supply of tickets for sports or musical venues, and the short run supply of agricultural products (where the yield is fixed at harvest time) the elasticity of supply = zero when the supply curve is vertical.
When supply is perfectly elastic a firm can supply any amount at the same price. This occurs when the firm can supply at a constant cost per unit and has no capacity limits to its production. A change in demand alters the equilibrium quantity but not the market clearing price.
When supply is relatively inelastic a change in demand affects the price more than the quantity supplied. The reverse is the case when supply is relatively elastic. A change in demand can be met without a change in market price.
You see where this is going Robbbbie, Not only each country but each region within a country has very different input to output costs. One such cost is the cost of labour. For your information and don’t tell the others but driving a truck is labour. So let us go over the actual wages for some regions of the world these are from government as well as private sector studies and surveys.
Let us start with Great Britain;
Heavy Goods Drivers 24,735 BPS up 0.1 percent this year.
Transport and mobile machine 21,391 BPS up 0.4 percent
Transport Drivers 21,270 BPS up 0.6 percent
Bus and Coach Drivers 21,198 BPS up 3.3 percent
1 BPS = 1.56225 Canadian dollars
So if we convert the BPS wages to Canadian dollars we get,:
$38642.25: $33418.08 : $33229.06 : and $33116.57 per annum.
Now Europe: converted to Canadian dollars for comparison;
Spain 6.42 euro/hr $8.60 Can : $1491.35 Can/month : $17896.21 per annum
Belgum 19.30 euro/hr; $25.86 Can: $4255.84 Can/month : $51070.08 per annum
Denmark 14.20 euro/hr : $19.03 Can: 3130.24 Can/month: $37562.88 per annum
Germany 10.06 euro/hr: $13.48 Can: $2197.60 Can per month: $26371.20 per annum
Czech 3.70 euro/hr: $4.96 Can: $777.70 Can per month: $9332.40 per annum
No figures for France as ox carts are not included.
Canada:
Truck Driver Toronto $17 $21 $29
Calgary $17 $23 $37
Winnipeg $13 $17 $33
U.S:
53-3011 Ambulance Drivers and Attendants, Except Emergency Medical Technicians
160 $10.21 $10.51 $21,860 3.5 %
53-3021 Bus Drivers, Transit and Intercity
250 $12.26 $12.85 $26,720 3.8 %
53-3022 Bus Drivers, School
1,830 $14.61 $14.75 $30,680 2.9 %
53-3031 Driver/Sales Workers
1,490 $10.89 $12.44 $25,870 6.0 %
53-3032 Truck Drivers, Heavy and Tractor-Trailer
7,620 $17.84 $18.39 $38,250 1.7 %
53-3033 Truck Drivers, Light or Delivery Services
2,000 $12.19 $13.36 $27,800 3.4 %
53-3041 Taxi Drivers and Chauffeurs
750 $8.73 $9.23 $19,190 2.7 %
North Dakota usa
53-3011 Ambulance Drivers and Attendants, Except Emergency Medical Technicians
1,860 $11.15 $11.21 $23,320 3.7 %
53-3021 Bus Drivers, Transit and Intercity
19,560 $25.44 $22.77 $47,350 4.0 %
53-3022 Bus Drivers, School
49,030 $16.49 $16.77 $34,890 1.2 %
53-3031 Driver/Sales Workers
14,130 $11.66 $14.23 $29,600 4.0 %
53-3032 Truck Drivers, Heavy and Tractor-Trailer
53,880 $19.88 $21.16 $44,010 1.0 %
53-3033 Truck Drivers, Light or Delivery Services
46,710 $14.97 $16.27 $33,850 1.5 %
53-3041 Taxi Drivers and Chauffeurs
14,410 $11.78 $12.79 $26,610 2.1 %
53-3099 Motor Vehicle Operators, All Other
2,240 $17.87 $17.63 $36,670 1.7 %
NY state
National estimates for this occupation: Top
Employment estimate and mean wage estimates for this occupation:
Employment (1)
Employment
RSE (3)
Mean hourly
wage Mean annual
wage (2)
Wage RSE (3)
1,550,930 0.5 % $18.87 $39,260 0.3 %
Percentile wage estimates for this occupation:
Percentile 10% 25% 50%
(Median) 75% 90%
Hourly Wage $11.85 $14.43 $18.14 $22.63 $27.39
Annual Wage (2)
$24,640 $30,020 $37,730 $47,080 $56,970
Industries with the highest levels of employment in this occupation:
Industry Employment Hourly mean wage Annual mean wage
General Freight Trucking
551,630 $19.72 $41,010
Specialized Freight Trucking
204,370 $18.69 $38,870
Grocery and Related Product Merchant Wholesalers
66,980 $20.47 $42,580
Cement and Concrete Product Manufacturing
61,030 $17.51 $36,420
Other Specialty Trade Contractors
38,930 $17.71 $36,830
Top paying industries for this occupation:
Industry Employment Hourly mean wage Annual mean wage
Postal Service
5,370 $25.49 $53,020
Other Transportation Equipment Manufacturing
300 $25.23 $52,470
States with the highest concentration of workers in this occupation:
State Employment Hourly mean wage Annual mean wage Employment per thousand workers
Nebraska
27,210 $20.89 $43,450 29.683
Arkansas
30,900 $17.04 $35,450 26.924
Iowa
34,870 $18.01 $37,460 23.701
Wyoming
6,200 $18.86 $39,240 21.957
North Dakota
7,620 $18.39 $38,250 21.550
Top paying States for this occupation:
State Employment Hourly mean wage Annual mean wage Employment per thousand workers
Alaska
2,820 $23.79 $49,480 9.136
Nevada
9,420 $21.97 $45,700 7.988
New York
53,880 $21.16 $44,010 6.349
District of Columbia
560 $21.16 $44,010 0.877
Connecticut
12,010 $21.14 $43,960 7.285
Metropolitan area profile for this occupation: Top
Metropolitan areas with the highest published employment concentrations and wages for this occupation are provided. For a list of all Metropolitan areas with employment in this occupation, see the Create Customized Tables function.
Metropolitan areas with the highest concentration of workers in this occupation:
MSA Employment Hourly mean wage Annual mean wage Employment per thousand workers
Joplin, MO
5,800 $22.47 $46,730 75.656
Fort Smith, AR-OK
5,080 $19.46 $40,480 43.234
Laredo, TX
3,390 $16.83 $35,010 38.967
Lincoln, NE
6,280 (8)
(8)
38.746
Cedar Rapids, IA
5,240 $19.00 $39,520 38.352
Top paying metropolitan areas for this occupation:
MSA Employment Hourly mean wage Annual mean wage Employment per thousand workers
Fairbanks, AK
460 $25.82 $53,710 12.953
Grand Rapids-Wyoming, MI
5,060 $25.20 $52,410 13.876
Danville, IL
610 $24.95 $51,890 21.630
Racine, WI
940 $24.02 $49,960 12.748
San Francisco-San Mateo-Redwood City, CA Metropolitan Division
3,110 $23.49 $48,850 3.169
Mean hourly and annual wages in Canada are considerably higher than the U.S
Cost of living: GLOBAL/WORLD COST OF LIVING RANKINGS 2010/2011
World Cost of Living 2010: Luanda in oil-rich Angola is the world’s most expensive city for expatriates, according to the latest Cost of Living Survey from Mercer. Tokyo is in second position, with Ndjamena in Chad in third place. Moscow is in fourth position followed by Geneva in fifth while Karachi is ranked as the world’s least expensive city. The survey found that Luanda is three times as costly as Karachi. Dublin, Ireland got a 42nd ranking and Belfast is at 182.
The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowance for their expatriate employees. New York is used as the base city for the index and all cities are compared against New York. Currency movements are measured against the US dollar. The cost of housing - - often the biggest expense for expats - plays an important part in determining where cities are ranked.
In some cities, it is only practical for an expat to live in an enclave because of crime problems and the availability of of modern services. In others, the choice of where to live is flexible. The cost of restaurant food in a city can be much lower for locals than what is assumed would be the preference for expats. For example in Kuala Lumpur, a meal per person can cost as low as $1.50 up to $25 (excluding drink) in a good Italian restaurant. Choice of location in a city often depends on proximity to an international school.
For the first time, the ranking of the world’s top 10 most expensive cities includes three African urban centres: Luanda (1) in Angola, Ndjamena (3) in Chad and Libreville (7) in Gabon. The top ten also includes three Asian cities; Tokyo (2), Osaka (6) and Hong Kong (jointly ranked 
. Moscow (4), Geneva (5) and Zurich (joint are the most expensive European cities, followed by Copenhagen (10).
According to Nathalie Constantin-Métral, a Senior Researcher at Mercer with responsibility for compiling the ranking each year: “In the past couple of years, corporate assignments have become truly global, with expatriates and ‘global assignees’ being transferred across all parts of the world. However, global mobility is still an expensive undertaking for companies, so selection of the right candidates and a real understanding of the costs involved in relocating staff to other countries are essential - - especially in today’s economic environment.”
“Our cities are selected based on requests from our multinational clients,” she continued, “Notably African cities now figure prominently reflecting the growing economic importance of the region to global companies across all business sectors.”
City rankings table
The most expensive city in the world for expatriates to live is Angola’s capital Luanda, according to research from Mercer. Milan Taylor from Mercer has more on the cost of living index:
Europe and the Middle East
After Moscow, Geneva, Zurich and Copenhagen, the most expensive cities in Europe are Oslo (11) in Norway, Milan (15) in Italy, London and Paris (both 17) and Bern (22) in Switzerland. Other expensive European cities include Rome (26), Vienna (28), St Petersburg (30) Amsterdam (35), Baku (36) Dublin (42), Istanbul (44), Barcelona (49), Frankfurt (50), Madrid (52) and Lisbon (72). Riga ranks 81 followed by Budapest (94), Warsaw (96) and Tallinn (115). The least expensive city in Europe is Tirana (200) in Albania, followed by Macedonia’s Skopje (197), Sarajevo (196) in Bosnia Herzegovina, Minsk (192) in Belarus and Belfast (182) in the UK.
Tel Aviv (19) is the most expensive city in the Middle East, Abu Dhabi (50) and Dubai (55). Tripoli (186) in Libya is the least expensive Middle Eastern location followed by Jeddah (181) in Saudi Arabia and Muscat (I76) in Oman.
Nathalie Constantin-Métral commented: “Accommodation costs have continued to decrease in Abu Dhabi and Dubai, driving down the cost of living for expats. The rankings are also very susceptible to exchange rate fluctuations.
However, in places like Jeddah and Tripoli, the lack of suitable accommodation for expats combined with strong demand, has pushed costs up."
Africa
Reflecting the increasing economic importance of this region across all business sectors, Mercer’s rankings prepared for this press release now includes many African cities. Many rank highly in the 2010 survey, reflecting the high living costs for expatriate employees. After Luanda, Ndjamena and Libreville, the region’s most expensive cities are Victoria (13) in the Seychelles, Niamey (23) in Niger and Dakar (32) in Senegal. In South Africa, Johannesburg and Cape Town rank 151 and 171, respectively. At the bottom of the ranking, Addis Ababa (208) in Ethiopia is the cheapest African city followed by Windhoek (205) and Gaborone (203) in Namibia and Botswana, respectively.
“We’ve seen demand increase for information on African cities from across the business spectrum — mining, financial services, airlines, manufacturer, utilities and energy companies,” commented Constantin-Metral.
“Many people assume that cities in the developing world are cheap but this isn’t necessarily true for expatriates working there. To entice talented staff to these cities, multi-nationals need to provide the same standard of living and benefits that these employees and their families would experience at home. In some African cities, the cost of this can be extraordinarily high - particularly the cost of good, secure accommodation,” she added.
Americas
Cities in Brazil are amongst the most expensive locations in the Americas with Sao Paulo (21) ranked as the most expensive city in both North and South America, as a result of the strengthening of the Brazilian Real against the US Dollar. In South America, Brazil’s Rio de Janeiro (29) is the second most expensive city followed by Havana (45) in Cuba, Colombia’s Bogota (66) and Brazil’s capital, Brasilia (70). Buenos Aires ranks 161. Nicaragua’s Managua (212), Bolivia’s La Paz (211) and Asuncion (204) in Paraguay were the least expensive cities in South America.
In the United States, New York (27) is the most expensive city followed by Los Angeles (55). Washington ranks 111. The least expensive City in the United States is Winston Salem (197). Mexico City (166) is the most expensive city in Mexico, while the cheapest is Monterrey (193). Vancouver (75) is the most expensive Canadian city followed by Toronto (76) and Montreal (98). Ottawa (136) is Canada’s least expensive city.
“The weakening of the US Dollar against a number of other currencies, combined with a decrease in the cost of rental accommodation, has pulled US cities down the rankings,” commented Constantin-Metral. “However, since March 2010 the dollar has strengthened so the situation does fluctuate.”
Asia Pacific
Two Japanese cities, Tokyo and Osaka, are the region’s most expensive cities. Other highly ranked Asian cities are Hong Kong (8), Singapore (11), Seoul (14), Beijing (16), Nagoya (19) in Japan, Shanghai (25) and Taipei (78). A total of seven Chinese cities appeared on the 2010 rankings, highlighting the increased commercial importance to multi-nationals of locations other than just Beijing Shanghai and Hong Kong.
New Delhi (85) is India’s most expensive city followed by Mumbai (89) and Bangalore (190). Elsewhere, Jakarta in Indonesia ranks 94, followed by Vietnam’s Hanoi and Thailand’s Bangkok (both at 121) and Kuala Lumpur (138) in Malaysia. Pakistan’s Islamabad (212) and Karachi (214) are the region’s two least expensive cities.
Sydney (24) is Australia’s most expensive city followed by Melbourne (33) and Brisbane (55) while Adelaide (90) is the country’s least expensive city. Auckland (149) is the most expensive city in New Zealand while Wellington (163) is the cheapest. The Australian Dollar and the New Zealand Dollar have strongly strengthened against the US Dollar, which has moved the cities up in the ranking.
“At the end of 2009 and the beginning of 2010, residential property prices in many Asian countries rose as the economic environment began to stabilise and demand for good expat housing increased,” commented Constantin-Metral. “The strengthening of the Australian and New Zealand Dollar against the US Dollar also made Australian and New Zealand cities more costly for expatriates coming from the US.”
Top 50 cities: Mercer’s cost of living ranking
Base City: New York, US = 100
Rank 2010 City Country
1 LUANDA ANGOLA
2 TOKYO JAPAN
3 NDJAMENA CHAD
4 MOSCOW RUSSIA
5 GENEVA SWITZERLAND
6 OSAKA JAPAN
7 LIBREVILLE GABON
8 ZURICH SWITZERLAND
8 HONG KONG HONG KONG
10 COPENHAGEN DENMARK
11 SINGAPORE SINGAPORE
11 OSLO NORWAY
13 VICTORIA SEYCHELLES
14 SEOUL SOUTH KOREA
15 MILAN ITALY
16 BEIJING CHINA
17 LONDON UNITED KINGDOM
17 PARIS FRANCE
19 TEL AVIV ISRAEL
19 NAGOYA JAPAN
21 SAO PAULO BRAZIL
22 BERN SWITZERLAND
23 NIAMEY NIGER
24 SYDNEY AUSTRALIA
25 SHANGHAI CHINA
26 ROME ITALY
27 NEW YORK UNITED STATES
28 VIENNA AUSTRIA
29 RIO DE JANEIRO BRAZIL
30 ST. PETERSBURG RUSSIA
31 HELSINKI FINLAND
32 DAKAR SENEGAL
33 BANGUI CENTRAL AFRICAN REPUBLIC
33 MELBOURNE AUSTRALIA
35 AMSTERDAM NETHERLANDS
36 BAKU AZERBAIJAN
37 BRATISLAVA SLOVAKIA
38 GUANGZHOU CHINA
38 NOUMEA NEW CALEDONIA
40 ATHENS GREECE
40 DOUALA CAMEROON
42 SHENZHEN CHINA
42 DUBLIN IRELAND
44 ISTANBUL TURKEY
45 ABIDJAN IVORY COAST
45 HAVANA CUBA
47 PRAGUE CZECH REPUBLIC
48 BRAZZAVILLE CONGO
49 BARCELONA SPAIN
50 FRANKFURT GERMANY
50 ABU DHABI UNITED ARAB EMIRATES
Mercer said in its commentary on 2009 results that for the most part, the fluctuations have been the result of important currency fluctuations and less so by price movements.
Price movements
Up until September and October 2008, it observed a substantial increase in prices of basic consumption items and energy in many parts of the world. In the last few months of 2008, there was a sharp reversal of this trend which continued into the early part of 2009. The March 2009 Cost of Living survey revealed a substantial decrease in petrol prices and a stabilisation of prices for many basic items in most of the locations. Inflation as measured by Mercer’s cost of living surveys shows relatively low levels of inflation globally.
The global economic downturn has dramatically changed many real estate markets. Some residential rental markets have been impacted by the credit crisis causing prices to decrease. Markets show signs of weakening as a result of increasing supply. The stock of properties for rent has increased as many new developments are difficult to sell and property owners decide to rent. Another reason for falling prices is rising unemployment and its consequence is decreasing demand.
On the other hand some markets react in the opposite way, because it is more difficult to get mortgage to buy property, people prefer to rent causing rising demand and as a result increasing prices.
Currency movements
The period from March 2008 to March 2009 was characterised by important currency fluctuations; in particular the US dollar strengthened against a number of currencies worldwide while the Euro weakened to the US dollar. The Euro has lost almost 13% against the US dollar and to currencies pegged to the US dollar. During the same period, the British pound has lost more than 26% against the US dollar.
Consequences of the currency movements on the expatriate compensation
Currency movements have a direct impact on the Cost of Living index. To illustrate this point, consider a transfer from Washington DC to London. In March 2008 the Cost of Living index Mean to Mean index was 140 (with Washington DC as 100). In March 2009, following the loss in value of the British pound to the US dollar, the Cost of living index dropped to 103 to reflect the increase in purchasing power of the USD in GBP terms (in the timeframe from March 2008 to March 2009, the USD has gained 35.9% against the GBP).
However, the important point is that for the assignee in London, despite this tremendous drop in the COL index, there was NO decrease in the combined spendable income and cost of living allowance in GBP terms. In other words, the same spendable income in USD adjusted by the new lower COL index and converted at the new exchange rate gives the stable host purchasing part as shown in the table below from 2009 data.
So Robbbbie you mental midget stop already your BS is not supported by reality. Cost of living is substantially lower in Canada than alot of countries and that difference increases as you move away from the urban centers. Most companies don’t care where you live they will still get you home when needed. Wages are on par or better than a number of regions. Ah no pictures Robbbie they didnt transfer over.
