Living Standard in OECD Member Countries

The research database for the present paper consists of the OECD countries (except Turkey and Lithuania). The primary objective of the study is to group the countries according to twelve variables - average wage, minimum wage, GDP per capita, rates of unemployment, exchange and inflation rates, income tax, GDP per hour worked, indices of industrial, construction and manufacturing production and retail trade index, determining which of them significantly affect the average wage and defining the type and strength of such a relationship. The average wage, minimum wage and GDP per capita are used after their conversion into purchasing power parity, allowing for the comparison of price levels and PPP in different countries. Another important aim is to develop forecasts of the wage level for OECD countries by 2020. With regard to the countries' clustering according to the above criteria, Czechia always ranks alongside other post-communist countries (except Slovenia). The only explanatory variables affecting the average wage significantly are GDP per capita, income tax and manufacturing and retail trade indices, GDP exerting a major influence. Simple regression analysis of the dependence between the average wage and GDP per capita indicates that its course is best captured by the concave parabola with the peak at 77,252 PPP USD. The selected second-order polynomial regression explains approx. 89 percent of the variability of the observed values of the average annual wage. Wage growth by 2020 is expected in virtually all the OECD countries.