Thursday, July 17, 2014

Question: why do expatriates receive a 15% bonus for living in China?

Its the air pollution

On some days the air pollution is 25 times worse than what’s considered safe in the U.S., deaths from lung cancer have risen 465 percent over the last three decades, and arecent study showed that Beijing residents can expect to spend significant periods of their life infirm. 

This is a compensating wage differential paid to keep employees from moving to cleaner cities.  Interestingly, companies like Coke offer the bonus only to expatriates (foreigners), not to local Chinese, as they have a lower probability of moving.


  1. How can I get one of the jobs? I'm willing to take the risk.

  2. This is a classic example of compensating wage differentials. Expats are being offered the bonuses due to the lack of desirability/added liability of living in an environment that may pose health risks. The companies need to reward these expats somehow so they are lured in with bonuses and likely other perks. I believe this is actually typical for most corporations placing expats.

    This reminds me of a Lisa Ling program I saw on CNN last weekend. It hi-lited the influx of individuals traveling from across the country to work in North Dakota because they were offering "6 figure" wages for oil jobs. There is a large supply of jobs that some might find unattractive; resulting in higher than anticipated wages offered to fill them. This was another example of compensating wage differentials.

    Jackie Yee