The gap in living standards between Canada and the United States has more than doubled since 1999, with inflation-adjusted gross domestic product per person in the U.S. reaching $23,757 more than Canada’s in 2024, according to a new study by the Fraser Institute.
The study, Squandering the Canadian Century Part 1: Comparing Economic Performance in Canada and the United States, examines economic outcomes in the two countries across living standards, incomes, employment, investment and productivity.
It found Canada fell further behind the U.S. across all of the measures examined during the first quarter of the 21st century.
GDP and employment income gap widens
In 1999, inflation-adjusted GDP per person in Canada was $48,076, compared with $58,842 in the U.S., a difference of $10,766. By 2024, GDP per person had risen to $83,286 in the U.S., compared with $59,529 in Canada.
"When comparing the economic performance of Canada relative to the U.S. since the beginning of the 21st century, it's abundantly clear that Canadian policymakers have failed to create an environment where we can prosper," said Jake Fuss, director of fiscal studies at the Fraser Institute and co-author of the study.
The difference in median employment income also widened during the period examined. In 2010, the earliest year for which the study says comparable data are available, inflation-adjusted median employment income was $6,126 higher in the U.S. than in Canada. By 2024, the difference had grown to $8,663.
Private-sector employment diverges
Employment patterns also diverged between the two countries.
Canada's private-sector employment declined as a share of total employment, falling from 81.2 per cent in 1999 to 78.5 per cent in 2024. The study says that indicates the government sector grew faster than the private sector.
In the U.S., private-sector employment increased as a share of total employment, rising from 85.8 per cent in 1999 to 86.5 per cent in 2024.
Productivity and investment lag
Productivity was another area where the study found a widening gap. Labour productivity in the U.S. increased by 67.9 per cent between 1999 and 2025, compared with a 26.7 per cent increase in Canada.
"The ability of transform raw materials and other inputs into demanded goods and services increased by more than a factor of 2.0 in the U.S. compared to Canada, which explains much of our languishing living standards," explained Fuss.
The study also examined business investment, which it describes as providing workers with the tools and technology needed to produce more or higher-quality goods and services.
Using comparable data beginning in 2007, the study found that Canadian investment per worker fell from nearly 90 cents for every dollar invested in the U.S. to 54 cents per dollar by 2024.
Fraser Institute calls for economic reforms
The Fraser Institute said the findings point to a need for changes in Canadian economic policy.
"After squandering the first quarter of the 21st century, it's up to policymakers in Canada to enact bold economic reforms to make the most of the rest of this century," said Grady Munro, senior policy analyst and co-author.
The Fraser Institute describes itself as an independent, non-partisan Canadian public policy research and educational organization. It has offices in Vancouver, Calgary, Toronto, Montreal and Halifax.