Gaps in GDP per capita

GDP per capita levels are typically used to compare living standards across countries. Differences in GDP per capita across countries can arise from differences in labour productivity levels and differences in labour utilisation (hours worked per capita). The latter can represent differences in unemployment, participation rates of the working age population and working hours per person employed.

Key facts

Very high growth rates in GDP per capita have meant that countries with initially lower GDP per capita levels converged towards average income levels in the OECD. This has been true for some OECD countries, in particular, for Estonia, Poland and the Slovak Republic, and for most emerging economies.

Nevertheless, in 2014, differences in GDP per capita remained significant across countries and also within the OECD area. GDP per capita was around 50% lower than the OECD average in Mexico and Turkey, while it was 2.5 times the OECD average in Luxembourg, 65% higher in Norway and 52% higher in Switzerland. Most of these differences in GDP per capita reflect differences in labour productivity levels. Half of the countries presented in Figure 1.6 (many of these non-European) show higher labour utilisation levels than the OECD average, narrowing their negative or reinforcing their positive gap in GDP per capita. This was notably the case for Iceland, Korea, Luxembourg, the Russian Federation and Switzerland.

Definition

GDP is measured as gross value added in market prices. Total hours worked used to calculate labour productivity measures are based on actual hours worked (annex B). Labour utilisation is defined as actual hours worked per capita.

Data on GDP at current prices are sourced from the OECD National Accounts Statistics (database). For international comparisons, these data are converted to a common currency, US dollars, using Purchasing Power Parities (PPPs). Unlike currency exchange rates, the PPPs are currency converters that control for differences in the price levels between countries, making possible to compare absolute volumes across them (annex F).

Information on data for Israel: https://doi.org/10.1787/888932315602.

Comparability

For Chile, China, Colombia, India, Japan, Turkey and the Russian Federation the indicators are in line with the System of National Accounts 1993 (1993 SNA). For all the other countries, the indicators presented are based on the 2008 SNA. The 2008 SNA includes items such as the capitalisation of research and development (R&D) and military weapons systems which increase GDP levels (annex D).

Population estimates are comparable across countries and are also sourced from the OECD National Accounts Statistics (database). However, some care is needed in interpretation as countries like Luxembourg and, to a lesser extent, Switzerland, have a relatively large number of frontier workers that contribute to GDP but are excluded from the population figures. In this context, cross-country comparisons of income per capita based on gross or net national income are also relevant.

Figure 2.5. GDP per capita convergence
Percentage change at annual rate (Y-axis); US dollars, current prices, current PPPs (X-axis)
picture

 https://doi.org/10.1787/888933346370

Figure 2.6. Differences in GDP per capita levels, 2014
Percentage differences vis-à-vis the OECD average, in current prices and current PPPs
picture

 https://doi.org/10.1787/888933346382

Sources and further reading

OECD Productivity Statistics (database), https://doi.org/10.1787/pdtvy-data-en.

OECD National Accounts Statistics (database), https://doi.org/10.1787/na-data-en.

OECD (2001), Measuring Productivity – OECD Manual, https://doi.org/10.1787/9789264194519-en.