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International Comparisons of Living Standards by Equivalent Incomes

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  • Marc Fleurbaey
  • Guillaume Gaulier

Abstract

We propose a measure of living standards for international comparisons. Based on GDP per capita, the measure incorporates corrections for international flows of income, labor, risk of unemployment, healthy life expectancy, household demography and inequalities. The method for comparing populations that differ in some non‐income dimension consists of computing the equivalent variation of income that would make each population indifferent between its current situation and a reference situation with respect to the non‐income dimension. This is applied to 24 OECD countries. The obtained ranking of countries differs substantially from the GDP ranking.

Suggested Citation

  • Marc Fleurbaey & Guillaume Gaulier, 2009. "International Comparisons of Living Standards by Equivalent Incomes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(3), pages 597-624, September.
  • Handle: RePEc:bla:scandj:v:111:y:2009:i:3:p:597-624
    DOI: 10.1111/j.1467-9442.2009.01578.x
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    More about this item

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P17 - Economic Systems - - Capitalist Systems - - - Performance and Prospects

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