Level of per capita GDP depends upon which of the following?

1. Proportion of population in the working age

2. Work participation rate

3. Per worker productivity

Select the correct answer using the code given below. 

The correct answer is 1, 2 and 3.

Key PointsFactors Affecting Per Capita GDP

• The proportion of population in the working age significantly affects a country's per capita GDP. A higher proportion of working-age population can lead to a higher potential labor force, which, if employed, enhances the nation's productivity and its per capita GDP. Hence, statement 1 is correct.
• Work participation rate refers to the number of individuals who are actively employed or seeking employment. A higher work participation rate indicates a more significant portion of the population contributing to the economy, thus potentially increasing the per capita GDP. Hence, statement 2 is correct.
• Per worker productivity is a crucial determinant of per capita GDP. It measures the average output per employed person. Higher productivity means more goods and services are produced per worker, leading to a higher overall economic output and, consequently, a higher per capita GDP. Hence, statement 3 is correct.

Additional Information

• Economic Development: Understanding these factors is crucial for policy-makers aiming to foster economic development. By focusing on increasing the working-age population through immigration or policies that support higher birth rates, improving work participation rates through education and training, and enhancing per worker productivity through technology and innovation, a country can significantly improve its per capita GDP.
• Demographic Dividend: The concept of demographic dividend refers to the economic growth potential that can result from shifts in a population's age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older). Countries aiming to capitalize on the demographic dividend must ensure that policies are in place to provide adequate employment and productivity enhancement opportunities to their working-age population.
• Technological Advancement: Technology plays a pivotal role in enhancing per worker productivity. Investments in research and development, innovation, and education are essential for improving productivity. Countries leading in technology adoption and innovation tend to have higher per capita GDP figures.
• Labour Market Policies: Effective labour market policies, including those that encourage participation of women and older workers, can significantly impact the work participation rate and, subsequently, the per capita GDP. Policies aimed at removing barriers to employment, providing retraining programs, and ensuring workplace flexibility are crucial in this regard.