Nice try, lovely, but 2 is the correct one. You can use the passive when describing the factors causing the improvement: living standards have been improved by rising wages. Personally I would avoid it: living standards have improved as a result of rising wages. Living standards are not usually referred to in the singular ('living standard'), but you can talk about 'the standard of living' which means the same as 'living standards' as a whole, and is somewhat more formal.

1 and 3 are correct.