Growth in household income has evolved differently from gross domestic product (GDP) in most OECD countries over the last eighteen years. Using the wealth of information available in the System of National Accounts, this paper provides an assessment of what may be driving this gap. A clear relationship, based on national accounts identities, between GDP and household income exists. This link allows for the calculation of each component’s contribution to the divergence in the growth rates. Based on this deconstruction, differences between the growth rates reflect several underlying effects that (often) offset each other. In many OECD countries, real GDP grew at a faster pace than real household income over the last eighteen years driven by different developments in prices faced by producers versus prices faced by consumers and a rising profit share of corporations. The positive evolution of the other components (such as government intervention) contributed to reducing the gap between the growth rates. Several indicators are investigated to help explain the underlying developments.
