Question

A typical U.S. worker today works fewer than 40 hours per week, while in 1890, he or she worked 60 hours per week. Does this difference in the length of work weeks matter in comparing the economic well-being of U.S. workers today with that of 1890? Or can we use the difference between real GDP per capita today and in 1890 to measure differ- ences in economic well-being while ignoring differences in the number of hours worked per week? Briefly explain.

Answer 1

Real GDP per capita used to compare the standard of living between nations and over time; and is computed as total economic output of a nation divided by the number of people and adjusted for inflation. Real income per capita is an inaccurate and insufficient indicator of living standards because although people are working fewer hours however are more productive due to innovations and new technology. Thus the difference in the length of work weeks does not matter. An average American has increased more than is reflected by making a comparison of 1890 real GDP per capita with current real GDP per capita, hence we should not use difference among real GDP per capita today and in 1890 to measure differences in well-being of people in economy