Diagram of the relationship between GRDP and total residential income. Viewing: What is per capita income
LTS: In the context of focusing on completing the district party congress for the term 2020-2025; preparing for the 11th Vinh Long Provincial Party Congress to the 13th Party Congress, contributing ideas to the draft documents of congresses at all levels and nationwide is an important work, contributing to the success of the first step. at the beginning of the congress and successfully implement the resolutions of the next term.
Before the congress, most of the delegates were serious and responsible for contributing ideas to the draft document of the congress at all levels. However, due to the lack of distinction, many opinions are still confused when comparing the data of the GRDP per capita indicator of the whole province with the per capita income of the districts, towns and cities.
In fact, gross regional product per capita (often called GRDP per capita) and income per capita are two completely different indicators in terms of concept, calculation method, meaning and purpose. intended use. I would like to introduce the article of Mr. Bui Thien Man- Head of Vinh Long Statistical Sub-Department.
GRDP per capita is an aggregate indicator that reflects the new value of goods and services created by the entire economy over a certain period of time (usually a year) on average per person. ; It is calculated by dividing the gross regional product (GRDP) by the average population.
GRDP per capita is an important indicator used to compare and evaluate the level of economic development and living standards of people between countries or between regions, provinces and cities in the country; is one of the bases for calculating the Human Development Index (HDI).
Per capita income is calculated as the total household income (total residential income) in a year divided by the number of members of the household.
To calculate this indicator, first of all, the total income of the household must be calculated. Household income is the total amount and value of items after deducting production costs that the household and its members receive during a certain period (usually a year). Household’s income includes: (1) Income from wages and salaries; (2) Income from agricultural, forestry and fishery production (after deducting production costs and production tax); (3) Income from non-agricultural, forestry and fishery production (after deducting production costs and production tax); (4) Other income is included in income such as income from gifts, congratulations, savings interest, etc.
Per capita income reflects income results, living standards and the rich-poor divide of all classes of the population, serving as a basis for making policies on hunger eradication, poverty reduction, and improvement of people’s living standards; do not use the HDI calculator.
Differences in content, calculation methods
Mainly due to the content, calculation method of GRDP and total residential income. The elements of these two indicators are different in that, on the one hand, new value is created in the territory, regardless of ownership or right to use (GRDP); one side is the income under the ownership and use rights of the population living in the territory, regardless of origin (total residential income).
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In order to represent the relationship between GRDP and total income of the province by the model, some assumptions are needed to simplify the problem as follows:
– Income from employees: Including:
+ Wages, salaries and other items included in the production and business costs of economic areas in the province are fully enjoyed by the employees who are residents in the province (in fact, there is a difference between the income of the local labor force and the total income of the local residents). Those who work in the province send it back and the income from people outside the province working in the province send out).
+ Income from production and business (profit) of economic establishments in the area owned by residents in the province (in the GRDP accounting in surplus).
– Surplus: Only includes income from production and business of economic establishments in the area owned by investors who are not residents of the province and of other organizations (not households or households). individual household members).
– Ownership income: Total net ownership income of capital and asset factors; lease, rent use rights, patents, trademarks, etc., are used by residents in the province.
– Current transfer revenue: All net current transfers increase the income of residents in the province for the purpose of final consumption.
– Taxes, depreciation of fixed assets understood according to the content of calculating GRDP.
In the diagram above, the left ellipse represents GRDP; The ellipse on the right shows the total income of the population. They have only one part in common, the worker’s income – the intersection of the two ellipses. Included in the GRDP but not included in the total residential income are production tax (collected by the State), depreciation of fixed assets (economic units included in the cost of reinvestment) and surplus (with The above assumption is the income of enterprises and investors). In contrast, the total residential income includes both ownership and transfer income current is not included in GRDP.
Differences in regulatory and indicator metrics
According to the Statistical Yearbook of Vinh Long Province in 2019, both of these two indicators are published completely differently: GRDP per capita according to table 45, page 111; and per capita income according to table 262, page 547. Preliminary in 2019, the province’s GRDP per capita is 52,306 million VND; and the province’s per capita income is 39,948 million VND (for the whole year), only 76.37% of the GRDP per capita. Data series 2015-2019 in this publication, per capita income is only 69.91%-76.94% GRDP per capita; the highest 76.94% (in 2018).
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Thus, GRDP per capita and income per capita are two completely different indicators; per capita income is always lower than GRDP per capita. Therefore, cadres, party members and people do not have to worry about the data on the per capita income of the districts, towns and cities which is lower than the GRDP per capita of the whole province.