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GDP Per Capita Versus Median Household Income: What Gives Rise to Divergence Over Time?

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  • Brian Nolan
  • Max Roser
  • Stefan Thewissen

Abstract

Divergence between the evolution of GDP per capita and the income of a ‘typical’ household as measured in household surveys is giving rise to a range of serious concerns, especially in the USA. This paper investigates the extent of that divergence and the factors that contribute to it across 27 OECD countries, using data from OECD National Accounts and the Luxembourg Income Study. While GDP per capita has risen faster than median household income in most of these countries over the period these data cover, the size of that divergence varied very substantially, with the USA a clear outlier. The paper distinguishes a number of factors contributing to such a divergence, and finds wide variation across countries in the impact of the various factors. Further, both the extent of that divergence and the role of the various contributory factors vary widely over time for most of the countries studied. These findings have serious implications for the monitoring and assessment of changes in household incomes and living standards over time.

Suggested Citation

  • Brian Nolan & Max Roser & Stefan Thewissen, 2016. "GDP Per Capita Versus Median Household Income: What Gives Rise to Divergence Over Time?," LIS Working papers 672, LIS Cross-National Data Center in Luxembourg.
  • Handle: RePEc:lis:liswps:672
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    2. François Bourguignon, 2017. "World changes in inequality: an overview of facts, causes, consequences and policies," BIS Working Papers 654, Bank for International Settlements.
    3. Emmerling, Johannes & Groom, Ben & Wettingfeld, Tanja, 2017. "Discounting and the representative median agent," Economics Letters, Elsevier, vol. 161(C), pages 78-81.
    4. Oliver Kovacs, 2019. "Big IFs in Productivity-Enhancing Industry 4.0," Social Sciences, MDPI, vol. 8(2), pages 1-17, January.
    5. Kovács, Olivér, 2017. "Az ipar 4.0 komplexitása - II [The Complexity of Industry 4.0 - Part 2]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 970-987.
    6. Anna M. Stansbury & Lawrence H. Summers, 2017. "Productivity and Pay: Is the link broken?," NBER Working Papers 24165, National Bureau of Economic Research, Inc.
    7. Kovacs, Oliver, 2018. "The dark corners of industry 4.0 – Grounding economic governance 2.0," Technology in Society, Elsevier, vol. 55(C), pages 140-145.
    8. Stephen Asafo Agyei, 2021. "The Dynamics of Remittances Impact: A Mixed-Method Approach to Understand Ghana’s Situation and the Way Forward," Social Sciences, MDPI, vol. 10(11), pages 1-21, October.
    9. Olivér Kovács, 2019. "Grounding Complexity Economics in Framing Modern Governance," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 69(4), pages 571-594, December.
    10. David T. Tan & Yi Gong & José Gabriel Siri, 2017. "The Impact of Subsidies on the Prevalence of Climate-Sensitive Residential Buildings in Malaysia," Sustainability, MDPI, vol. 9(12), pages 1-26, December.

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