Cost of Living

Cost of Living refers to the amount of money and other resources necessary to maintain a specific standard of living.

Expats across the world face the common challenge of adapting from the cost of living in their home country to the cost of living in their destination country.

Mercer’s 2022 Cost of Living City Ranking offers a snapshot of the difference in the cost of living in various cities throughout the world.

What is a Cost of Living Adjustment (COLA)?

A Cost of Living Adjustment (COLA) is a modification of the compensation expats receive to meet the standard of living in the location to which they relocate.

Multinational organizations often use a cost of living information services provider to help them calculate a COLA that is based on up-to-date information that is transparent and easily understood by the expats who embark upon international expatriate assignments. COLAs are used to help structure expatriate compensation packages.

This is generally accomplished by comparing a "basket of goods" or "market basket" to compare the purchasing power of money of money in different locations. These goods typically include items such as housing, food, education (tuition, books, associated technology), transportation, entertainment, and medical care, among others.

Examples of providers include Mercer's Cost of Living Services and ECA International.

Mercer's Cost of Living Services Brochure offers insight in how these services are marketed to HR professionals.

Online Cost of Living Databases for Expatriates

Both Expatistan.com and Numbeo.com aggregate cost of living information that is updated by people living in various locations throughout the world.