Methodological Notes – Socioeconomic Conditions

Updated: January 2019

Concepts and Definitions

Socioeconomic conditions are widely recognized to be important determinants of health. Although there are many measures, the number that can be used for international comparisons is limited. Variables such as income, education and employment are measured differently in different countries and they have different contexts. CircHOB selects for monitoring measures on the economy, education and employment.

The gross domestic product (GDP) is a well-established economic indicator, and is a measure of the goods and services produced within a country or region within a time period. “Domestic” refers to production occurring within the country or region, including activities of foreign- owned firms or migrant workers. GDP is to be contrasted with gross national product (GNP) which encompasses also production by a country’s citizens abroad. The GDP divided by the population produces the per capita GDP.

Cross-national comparisons require the conversion of multiple currencies to a common standard. While the US dollar at market exchange rates is often used, economists construct “purchasing power parities” (PPP) to adjust for price differences among countries. As Arctic-regional PPP- factors have not been developed, and it is the PPP-factors of the national economies that are used, which could be a potential source of bias, especially if price levels are different among regions within countries.

GDP can be expressed either in current prices, i.e. the prices in effect during the year in question, or constant prices, based on the prices in effect during a specified base year (2010 is used by both OECD and World Bank). GDP based on constant prices is called “real” GDP, which has been adjusted for price changes (inflation or deflation) over time. In CircHOB, real GDP is used to track time trend within a country or region. GDP based on current prices is used to compare countries/regions during the same time period.

The use of GDP as a measure of economic well-being has well-known shortcomings:

  • Non-market transactions (child rearing, homemaking, etc) are excluded
  • Economic activities that are detrimental (eg. to the environment) are included
  • Value of leisure and other aspects of quality of life are excluded
  • Income distribution across the population is not measured
  • The sustainability of production is not considered

For northern regions, there are additional issues:

  • A sizable proportion of the workforce in the north consists of seasonal workers from outside the region, and many firms are owned by non-residents and their profits leave the region. The regional GDP thus does not reflect the true income accruing to the residents of the region. On the other hand, a region such as Alaska, with its Alaska Permanent Fund, generates billions of dollars of investment income outside the state which is not captured by the state’s GDP
  • Many northern regions are subsidized by the national governments, and such public sector spending are included in the regional GDP
  • Subsistence activities, especially Indigenous people, may not be consistently counted or valued
  • Northern economies that are dependent on a few natural resources (eg. oil and gas) may be subject to substantial year-to-year variation due to market price fluctuations

A full discussion and explanation of these issues can be found in the Statistics Norway report The Economy of the North 2015 

Another measure of economic well being, but at the individual level, is the employment status. While the unemployment rate is well known, it is often misunderstood. It is the proportion of unemployed people in the labour force, consisting of the employed, unemployed and those looking for work. For many economically depressed regions where there are few employment opportunities, many people have given up on job-seeking and thus not counted in the denominator. In contrast, the employment rate measures the proportion of employed people among the total population, usually within a specified age range. It reflects better the economic well being of the population. Note that the employment rate is not 100% minus the unemployment rate.

Defining who is employed can vary across jurisdictions. It usually refers to the civilian, noninstitutionalized population, but may include also members of the armed forces. The reference period is usually 1 week prior to the survey. Paid employment and self-employment, part-time and full-time work, people who work without pay for family members and people on leave are included, while volunteers are not.

For more details, see the OECD document Labour Force Statistics in OECD Countries: Sources, Coverage and Definitions

Along with employment, education is also recognized as an important determinant of health. International comparison of educational levels of individuals is complicated by the vastly different educational systems in operation in different countries. CircHOB monitors tertiary education attainment, the proportion of the adult population who have completed tertiary education or attained qualifications at that level. Tertiary education is generally more easily identifiable and comparable across education systems. Disparities in tertiary education attainment are likely to be more pronounced across countries and regions than secondary education, which is likely to be uniformly high in the circumpolar countries.

Some statistical agencies report their results on the population aged 15 and above, or 25 and above, with some restricting to only the “working age” (up to age 65), and others up to age 75. In young adulthood, many individuals are still engaged in formal schooling, and may not have completed their highest level of education. Setting the lower age limit at 25 reduces this problem. CircHOB presents education attainment data for the age range of 25-64, or as closely as possible to ensure comparability.

The International Standard Classification of Education (ISCED), developed by UNESCO and last revised in 2011, is based on the duration of training, age at entry and completion, academic content, etc, and attempts to encompass variation in educational systems in the world. Levels 6,7, and 8 refer to programs leading to the bachelor’s, master’s and doctoral degree or their equivalents, respectively. Level 5 refers to “short-cycle tertiary education” which is more technical or practical than academic or theoretical, and of shorter duration. ISCED levels 5 – 8 according to the 2011 edition are equivalent to levels 5 and 6 in the earlier 1997 version. Details on ISCED can be found in the OECD Handbook for Internationally Comparative Education Statistics statistics-2018-9789264304444-en.htm

Data Sources and Limitations

Gross domestic product

GDPs for countries and their regions are calculated from national and regional accounts by national statistical agencies. Data for circumpolar regions are available from OECD and the World Bank. In CircHOB data for Canada, Denmark, Finland, Iceland, Norway, Sweden, Russia, the United States and their respective northern regions are obtained from OECD
Regions and Cities > Regional statistics > Regional economy > Regional Gross Domestic Product

Data for Greenland and Faroe Islands are available from the World Bank World Development Indicators

Employment status

Information on employment status in most countries is obtained from labour force surveys, conducted at various intervals, as frequently as monthly in some jurisdictions. Data for men and women are presented separately, and the age range is 15-64. Data sources reporting only 15+ cannot be used as the rates for 15-64 is generally higher than those for 15+. Some countries also have employment registries but the data are not comparable to those from labour force surveys and are not used in CircHOB.

Data for Denmark, Iceland, Norway, Sweden and Russia are from OECD Regions and Cities > Regional statistics > Regional labour > Employment at place of residence. There are gaps for the northern regions of Norway and Sweden; however, data are available at the higher level of northern Norway and northern Sweden.

Although United States data are available from OECD, Alaska data are available for age 15+ only. Only national data for the 2000-04 from OECD are presented. For the 2005-09 and 2010-14 periods, the 5-year aggregate data from the annual American Community Survey for the respective period, in the age range 16-64, are used > Advanced search > enter table name B23001 in search term.

For Canada, data for the territories by age and sex are not available from OECD. Data from the 2001 Census are used for the 2000-04 period, the 2006 Census for the 2005-09 period, and the 2011 National Household Survey for the 1010-14 period Census datasets >
Select 2001 Census from filter > enter Cat. No. 95F0377XCB2001001
Select 2006 Census from filter > enter Cat. No. 97-559-XCB2006016
Select 2011 NHS from filter > enter Cat. No. 99-012-X2011037

Greenland data (from 2008 onwards) are from Statistics Greenland’s StatBank Labour market > Employment > Table AREBFB1
Values for the 2005-09 period are the mean of 2008 and 2009 values. Of the two variables available, the “number of main employed persons in average per month” is used rather than “number of main employed persons at least one month in the year”. The former is closer to the definition used by OECD.

Faroe Islands data (from 2005 onwards) are from Statistics Faroe Islands Labour and wages > Labour force > Table AM01020

National data for Finland are obtained from OECD. For the regions, OECD provides sex-specific employment rates for age 15-74 and not 15-64. Regional employment rates for age 15-64 (M and F combined) are available from Statistics Finland’s StatFin database Labour market > Labour force survey.
To estimate regional sex-specific employment rates for age 15-64, the ratios of male/total and female/total rates for age 15-74 from OECD are applied to the StatFin combined rates.

Tertiary education

The sources of educational attainment data include censuses, labour force surveys, and particularly in the Nordic countries, education registers. Unless otherwise specified, the age range is 25-64, and tertiary education corresponds to ISCED (2011) levels 5-8. Data for men and women are presented separately.

United States data are available from the US Census Bureau’s annual American Community Survey Guided search > People > Education > Education attainment. The age range is 25+. The definition of tertiary degree includes an “associate” degree or higher (bachelor’s, master’s, and doctorate).

For Canada, data from the 2001 Census are used for the 2000-04 period, the 2006 census are used for the 2005-09 period, and the 2011 National Household Survey for the 1010-14 period Census datasets >
Select 2001 Census from filter > enter Cat. No. 97F0017XCB2001006
Select 2006 Census from filter > enter Cat. No. 97-560-XCB2006007
Select 2011 NHS from filter > enter Cat. No. 99-012-X2011040
Individuals who have attained tertiary education comprise those aged 25-64 with degrees/diplomas/certificates from community colleges and universities.

Denmark data are available from OECD > Education and training > Education at a glance > Educational attainment and outcomes > Educational attainment and labour force status

Greenland, Faroe Islands, and Iceland data are from Nordic Statistics Nordic statistics > Education > Level of education, Table EDUC01. Age range is 25-64.

Norway national and regional data are from Statistics Norway’s StatBank Education > Level of education > Educational attainment of the population > Table 08921. Individuals aged 25-66 are covered. The Statistics Norway table is based on the National Education Database, whereas OECD data for Norway are derived from labour surveys.

Sweden data are from Statistics Sweden’s Statbank Education and research > Population 16-74 years of age by highest level of education, age and sex, extracting those aged 25-64. However, ISCED 1997 is used, with categories 4 and 5B combined in one category, thus including some individuals in the “post-secondary, non-tertiary” category in ISCED 2011.

Finland data are from Statistics Finland’s StaFin database Education > Educational structure of the population. The data are based on Statistics Finland’s Register of Completed Education and Degrees.

Russia educational data have been reported by OECD since 2010, but only nationally and not for the regions. Regional data are available from the Russian census of 2002 and 2010, with categories of “postgraduate” and “higher”. The number of people in these categories, however, are substantially lower than those in ISCED levels 5-8 reported by OECD. The 2002 census data are used to represent the 2000-04 period, and the 2010 census data for the 2010-14 period.

2002 Census: (national) (regional) 2010 Census:
> Volume 3: Education > Table 1.

A series of steps are undertaken to extrapolate ISCED-comparable data for Russia and its regions, based on the mean of the 2010-14 values for Russia nationally from OECD. Several ratios are first computed: (1) The ratio of the 2002 census values to the 2010 census values for Russia nationally; (2) the ratio of each region’s value to the national value for the 2002 and 2010 census:

  • To obtain the national value for the 2000-04 period, the 2010-14 OECD national value is applied to the 2002/2010 census ratio
  • To obtain regional values for the 2000-04 period, the 2010-14 OECD national value is applied to the regional/national ratios from the 2002 census
  • To obtain regional values for the 2010-14 period, the 2010-14 OECD national value is applied to the regional/national ratios from the 2010 census
  • No attempt is made to extrapolate national or regional values for the 2005-09 period