eli5 why does pay depend on where the job is located?

Question

Two people working the exact same job, in the same nation, but differently compensated because of where the live just sounds off to me.

In: 0

Answer 1

You work in Lisbon, where average rent is 1600€, I work in Freixo de Espada à cinta where average rent is 800€. You either get paid more or the company can’t hire anyone in Lisbon.