The cost of a haircut basically depends on the wages of hairdressers. According to United Bank of Switzerland (UBS) analysts, who used data from 2015, haircuts for women cost $95.04 in Oslo, Norway; $83.97 in Geneva, Switzerland, but only $4.63 in Jakarta, Indonesia, and $9.27 in Beijing, China. Hairdressers are paid more in rich countries. Hence, haircuts cost more in rich countries than in poor countries. That’s pretty obvious, but it has deep implications, as we shall see. It even has a name: the Balassa-Samuelson effect, after Hungarian economist Béla Balassa and Nobel Prize winner Paul
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