What factor contributes to higher real wages in certain countries?

Higher real wages in certain countries can primarily be attributed to increased productivity rather than solely the amount of labor available. When countries experience higher levels of labor supply, it suggests there are more workers ready and able to take jobs. However, real wages increase because a surplus of workers may compel employers to enhance productivity, which typically involves investing in better technology or processes that allow each worker to produce more.

Additionally, when the labor supply is higher, businesses might compete for workers by offering better pay and benefits to attract and retain talent, especially if the demand for labor is also rising. The combination of these factors can contribute to boosting real wages—wages adjusted for inflation, which reflect the purchasing power of workers. Enhancements in productivity and competition in the labor market lead to better compensation for employees, resulting in higher real wages over time.

The other options, such as high nominal wages, decreased demand for labor, and higher unemployment rates, do not adequately explain real wage increases. High nominal wages alone do not guarantee increased real wages if inflation is also high. Decreased demand for labor typically leads to lower wages because, without increased demand for employees, employers do not need to incentivize workers with higher pay. Higher unemployment rates tend to put downward pressure on