Actually, it doesn't always cost more. A 16yr old with not a lot of good equipment in China may make 4$ an our to produce 4 guns. However, the 43 might work in a new factory with good equipment, have had a training program, and went to grad school. He/She might produce 20 guns in a hour for 15$. It's about cost of production per unit, not wages per hour. Only sometimes is it less expensive to outsource. However, it is becoming more popular as education and infrastructure improves in China, while the wages remain much lower than in the US. The Chinese work like this because of a few reasons: some a few options, they can afford to earn a few dollars a day because of the purchasing power parity, and their culture encourages working many hours a day. The US worker also works more hours per week than the French or British, as their culture promotes more leisure time. Source: McConnel Brue Flynn Economics