Assuming employees have the same productivity in two different locations, shouldn't a company even pay more to the employees in the location that has lower operational cost, because the company will end up having a higher margin anyway? Instead, what I often see is that companies use "lower living cost"(which I assume is correlated with lower operational cost) as a justification of paying an employee less.

Yeah yeah, I understand that it eventually boils down to supply and demand of talent, but just saying...