Saturday, October 29, 2005

Non-market activity in international GDP comparison

An interesting point has been raised in the current issue of the Journal of Economic Perspectives article on measurement of U.S. National Income and Product Accounts (NIPA). The article notes that the values of non-market goods, such as childcare or cooking is excluded from the NIPA and therefore many of the gains in the U.S. income statistics reflect the increase in female labor market participation and the resulting marketization of the previously non-market productions. The article specifically mentions that the increased marketization of this production could distort time-series comparisons of GDP across countries because in many countries, there is a larger value of these services that are not included in NIPAs because they are subject to non-market valuations, where they have been in the U.S. It is an interesting point which suggests another reason for suspicion in the comparisons of countries' GDP where there are different rates of female labor force participation.

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