The Organization for Economic Co-operation and Development (OECD) has released the 2013 Better Life Index report on life satisfaction in the developed world that lists countries on the scales of happiness.

Switzerland is the happiest country in the world, according to the report that measures happiness quotient of a country on the basis of five key factors, including income, education, health, work-life balance and life satisfaction.

United States fails to make the top ten happiest countries in the world for the third time in a row, while countries like Canada, Mexico and all of the Scandinavian nations did. UK also stands nowhere in the top ten.

Nations which scored highest in overall life satisfaction had the highest employment rates.

"Of the 10 countries with the highest levels of reported life satisfaction, eight had among the 10 highest employment rate — that is, the percentage of the population that is employed," the report said.

Countries like Greece, Portugal and Italy had the lowest reported levels of life satisfaction and exhibited unemployment rates in excess of 11% in 2012.

"For life satisfaction, it is pretty clear that unemployment drives the relationship. Not having a job when you're willing and able to work affects life satisfaction more than anything else, Conal Smith, section head within the statistics directorate at the OECD, told 24/7 Wall St.

The report also identifies gender-related inequalities as a determinant of happiness for a nation.

"Where the gender disparities are the lowest, you actually observe that the overall well-being is the highest. There seems to be that correlation that where gender disparity is lower and a higher level of overall well-being," Romina Boarini, head of the well-being and progress section at OECD, said.

The OECD report further suggests that housing, community, the environment, civic engagement and safety also account for the happiness of citizens of a nation.

The top ten happiest countries in the world, for 2013, based on scores in overall life satisfaction are:

1. Switzerland

Switzerland moved from fourth to top slot in happiest countries' list scoring 7.8 in Life Satisfaction. (Photo: stock.xchng)
Switzerland moved from fourth to top slot in happiest countries' list scoring 7.8 in Life Satisfaction. (Photo: stock.xchng)

2. Norway

Norway maintained its second place with 7.7 score in Life Satisfaction. In picture: City of Alesund (Photo: stock.xchng)
Norway maintained its second place with 7.7 score in Life Satisfaction. In picture: City of Alesund (Photo: stock.xchng)

3. Iceland

Iceland is a new entry this year with 7.6 score in Life Satisfaction.
Iceland is a new entry this year with 7.6 score in Life Satisfaction. In picture: Capital city of Reykjavík (Photo: Wikimedia Commons)

4. Sweden

Sweden ties with Iceland at 7.6 score in Life Satisfaction but moved up to 4th slot from 10th in last year's report. In picture: Stockholm (Photo: stock.xchng)
Sweden ties with Iceland at 7.6 score in Life Satisfaction but moved up to 4th slot from 10th in last year's report. In picture: Stockholm (Photo: stock.xchng)

5. Denmark

Sweden fell from its no. one slot in last year's report with 7.5 score in Life Satisfaction. In picture: The Nyhavn (
Sweden fell from its no. one slot in last year's report with 7.5 score in Life Satisfaction. In picture: The Nyhavn ("New Harbor"), in Copenhagen (Photo: stock.xchng)

6. Netherlands

Netherlands ties with Sweden at 7.5 score in Life Satisfaction. In picture: Amsterdam (Photo: stock.xchng)
Netherlands ties with Sweden at 7.5 score in Life Satisfaction. Last year, Netherlands ranked third. In picture: Amsterdam (Photo: stock.xchng)

7. Austria

Austria dipped from its 5th rank with 7.4 score in Life Satisfaction this year. In picture: park of Schönbrunn, Vienna (Photo: stock.xchng)
Austria dipped from its 5th rank with 7.4 score in Life Satisfaction this year. In picture: park of Schönbrunn, Vienna (Photo: stock.xchng)

8. Canada

Canada ties with Austria at 7.4 score in Life Satisfaction this year. In picture: The Canadian Parliament (left), the Rideau canal and the Fairmont Chateau Laurier hotel in Ottawa (Photo: stock.xchng)
Canada ties with Austria at 7.4 score in Life Satisfaction this year. In picture: The Canadian Parliament (left), the Rideau canal and the Fairmont Chateau Laurier hotel in Ottawa (Photo: stock.xchng)

9. Finland

Finland maintained its last year's score of 7.4 in Life Satisfaction but fell 7th to 9th rank. In picture: The Lutheran Cathedral in Helsinki (Photo: stock.xchng)
Finland maintained its last year's score of 7.4 in Life Satisfaction but fell 7th to 9th rank. In picture: The Lutheran Cathedral in Helsinki (Photo: stock.xchng)

10. Mexico

Mexico is a new entry on top ten happiest countries' list for 2013 with 7.3 score in Life Satisfaction. In picture: Mexico City Cathedral (Photo: stock.xchng)
Mexico is a new entry on top ten happiest countries' list for 2013 with 7.3 score in Life Satisfaction. In picture: Mexico City Cathedral (Photo: stock.xchng)