This free Equivalent Salary Calculator tool calculates the equivalent salary you would need to maintain the same standard of living in another country as you do in your home country. This tool uses purchasing power parity (PPP) data from the World Bank to calculate and present the information to you.
PPP stands for Purchasing Power Parity. It's a way to compare the value of money between different countries. It helps us understand how much things cost and how much a certain amount of money can buy in different places. It's useful for comparing living standards and the cost of goods and services in various countries.
The Purchasing Power Parity (PPP) is calculated by comparing the prices of a basket of goods and services in different countries. Its purpose is to determine the exchange rate at which this basket has the same cost in each country. In simpler terms, it helps us understand how much money you would need in one country to buy the same set of goods and services that you could purchase for a certain amount in another country.
The formula for calculating Purchasing Power Parity (PPP) for a country's currency against the currency of any other country (typically using the US Dollar or another stable currency as the reference) is:
(Price of a Specific Basket of Goods and Services in One Country)/
(Price of the Same Basket of Goods and Services in Another Country)
Have you ever wondered how much money people in other countries pay for the same set of things you pay for in your country? Are goods and services cheaper or more expensive in other countries?
Equivalent salary, often referred to in the context of Purchasing Power Parity (PPP), is a powerful concept that helps us compare salaries and standards of living across different countries. It answers essential questions like: How does your income in one country compare to what it would be worth in another? Is a high salary in one place truly "high" when considering the cost of living elsewhere?
Equivalent salary is the amount of money you would need in one country to have the same purchasing power as your current salary in another country.
To calculate equivalent salary, you typically use the Purchasing Power Parity (PPP) exchange rate, which represents the relative value of currencies based on a basket of common goods and services. Here's a simplified formula:
Equivalent Salary in Country B=
(Salary in Country A) / (PPP of Country A)x
(PPP of Country B)
For example, if you earn INR 100,000 annually in India, and the PPP of India is
22.909 and the PPP of Canada is
1.225, then your Equivalent Salary in Canada would be -
Equivalent Salary in Canada=
INR 100,000 / 22.909x