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Raising Canadian Living Standards: A Framework for Analysis

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  • Andrew Sharpe

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Abstract

The living standards in Canada, defined as real GDP per capita, declined relative to those in the United States in the 1990s. A key challenge facing Canadians is the reversal of this situation. In this article, Andrew Sharpe of the Centre for the Study of Living Standards develops a framework for the analysis of living standards and outlines a strategy to raise living standards. Sharpe first examines trends in and determinants of living standards in Canada. He finds that over the 1946-2001 period productivity growth accounted for all the growth in living standards. Large declines in average hours worked reduced living standard growth, but increased labour force participation and a more favourable demographic structure made a positive contribution. Sharpe notes that living standards could be increased by lower unemployment, greater labour force participation, and longer working time, but points out that there is little scope for long-term improvement from these sources. Rather, he argues, productivity growth represents the only sustained avenue for living standards growth. With our level of aggregate labour productivity 16 per cent below the US level, Canada has the potential to reduce much of the productivity gap with the United States and possibly even to eliminate it completely. Such a development would allow Canadians to achieve US levels of real GDP pr capita, or if they so chose, to take the productivity gains in the form of increased leisure.

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Bibliographic Info

Article provided by Centre for the Study of Living Standards in its journal International Productivity Monitor.

Volume (Year): 5 (2002)
Issue (Month): (Fall)
Pages: 23-40

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Handle: RePEc:sls:ipmsls:v:5:y:2002:2

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Keywords: Canada; United States; Living Standards; Quality of Life; Well-being; Wellbeing; Labour Productivity; Labor Productivity; Productivity; Income Gap; Income; Gap; Growth; Increase; Improve; Target; Labour Force Participation; Participation; Working Age; Demographic; Fertility; Age;

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References

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  1. Pierre Fortin, 2001. "The Irish Economic Boom: What Can We Learn?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 3, pages 19-31, Fall.
  2. Lars Osberg & Andrew Sharpe, 2010. "The Index of Economic Well-Being," Challenge, M.E. Sharpe, Inc., vol. 53(4), pages 25-42, July.
  3. Osberg, Lars & Sharpe, Andrew, 2002. "An Index of Economic Well-Being for Selected OECD Countries," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 291-316, September.
  4. Osberg, L. & Sharpe, A., 1998. "An Index of Economic Well-being for Canada," Department of Economics at Dalhousie University working papers archive 98-08, Dalhousie, Department of Economics.
  5. Andrew Sharpe, 2002. "Recent Productivity Development in the United States and Canada: Implications for the Canada-U.S. Productivity and Income Gap," International Productivity Monitor, Centre for the Study of Living Standards, vol. 4, pages 3-14, Spring.
  6. Osberg, L. & Sharpe, A., 1998. "An Index of Economic Well-being for Canada," Department of Economics at Dalhousie University working papers archive 98-08, Dalhousie, Department of Economics.
  7. Andrew Sharpe, 2002. "Productivity Concepts, Trends And Prospects: An Overview," The Review of Economic Performance and Social Progress, in: Andrew Sharpe, Executive Director & France St-Hilaire, Vice-President , Research & Keith Banting, Di (ed.), The Review of Economic Performance and Social Progress 2002: Towards a Social Understanding of Productivity, volume 2 Centre for the Study of Living Standards & The Institutute for Research on Public Policy.
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Cited by:
  1. Andrew Sharpe, 2003. "Linkages Between Economic Growth and Inequality: Introduction and Overview," Canadian Public Policy, University of Toronto Press, vol. 29(s1), pages 1-14, January.
  2. Petr Hanel, 2007. "Productivity and innovation: an overview of the issues," Cahiers de recherche 07-22, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  3. Centre for the Study of Living Standards, 2003. "Productivity Trends in Natural Resources Industries in Canada," CSLS Research Reports 2003-01, Centre for the Study of Living Standards.

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