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Raising Canadian Living Standards: A Framework for Discussion

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  • Centre for the Study of Living Standards

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Abstract

Canada’s living standards have been falling relative to those in the United States in recent years. The Chairman and CEO of the TD Bank Financial Group, Charles Baillie (2001) has suggested that Canadians adopt as a societal goal not only the reversal of this downward trend, but that Canadian living standards exceed US living standards within 15 years. Policies that the public and private sectors might adopt to attain this very ambitious objective were the focus at the multi-stakeholder roundtable organized for October 7-8, 2002. The objective of this background paper is to provide a framework for discussion of the issue of raising Canadian living standards. The paper first discusses definitions of living standards and related concepts. It then examines trends of living standards historically in Canada and the United States and in OECD countries. The third section looks at the relative importance of the determinants of living standards ?productivity, working time, demographic structures, labour force participation, and the unemployment rate ?in the growth of living standards in Canada and in accounting for the income gap with the United States and other countries. The fourth section discusses what strategies need to be pursued in terms of the five determinants of living standards growth for Canada to exceed US living standards by 2016. The key conclusions of the paper are twofold. First, a focus on improving Canada’s productivity growth performance, and in particular, eliminating the Canada-US productivity gap, is by far the most important and effective way to attain the objective of Canadian living standards exceeding US living standards by 2016. Second, an objective for Canada of matching or exceeding the US productivity level is probably a better societal objective than equaling or exceeding US living standards, as measured by GDP per capita. Attaining this objective would certainly give Canadians the opportunity to have the same level of per capita income as Americans, but it would also give Canadians the option of choosing more leisure time, a component of economic well-being that is currently not incorporated into GDP.

Suggested Citation

  • Centre for the Study of Living Standards, 2002. "Raising Canadian Living Standards: A Framework for Discussion," CSLS Research Reports 02td, Centre for the Study of Living Standards.
  • Handle: RePEc:sls:resrep:02td
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    File URL: http://www.csls.ca/reports/tdpaper.pdf
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. Lars Osberg & Andrew Sharpe, 2010. "The Index of Economic Well-Being," Challenge, Taylor & Francis Journals, vol. 53(4), pages 25-42.
    4. 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.
    5. 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.
    6. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Living Standards; Canada; United States; GDP per capita; Growth; Income; Income Growth; Productivity; Productivity Gap; Productivity Growth; Growth Differentials; Growth Gap;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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