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Raising Canadian Living Standards: A Framework for Analysis

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  • Andrew Sharpe

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.

Suggested Citation

  • Andrew Sharpe, 2002. "Raising Canadian Living Standards: A Framework for Analysis," International Productivity Monitor, Centre for the Study of Living Standards, vol. 5, pages 23-40, Fall.
    • Handle: RePEc:sls:ipmsls:v:5:y:2002:2
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    File URL: http://www.csls.ca/ipm/5/sharpe-e.pdf
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    File URL: http://www.csls.ca/ipm/5/sharpe-f.pdf
    File Function: version en francais, pp:25-43
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    References listed on IDEAS

    as
    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. Martin Neil Baily, 2002. "Distinguished Lecture on Economics in Government: The New Economy: Post Mortem or Second Wind?," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 3-22, Spring.
    5. 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.
    6. Lars Osberg & Andrew Sharpe, 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.
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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. 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.
    3. Petr Hanel, 2007. "Productivity and innovation: an overview of the issues," Cahiers de recherche 07-22, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.

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    More about this item

    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;
    All these keywords.

    JEL classification:

    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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