European Union Economies Facing ‘Baumol's Disease’ within the Service Sector*

Fernández, Rafael; Palazuelos, Enrique

doi:10.1111/j.1468-5965.2011.02222.x

Cited by 18 publications

(9 citation statements)

References 25 publications

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“…The diverging results with regard to embodied labour productivity in the production sectors in Germany and the UK highlight that it is important to go beyond the stylised division and take into account local context and complexity. This complexity has also been highlighted in other research on the topic [35,36]. The adoption of a supply-chain perspective demonstrates one aspect of this complexity, namely the interconnectedness of the different conventional sectors.…”

Section: Baumol's Cost Disease As a Barrier To The Post-growth Transimentioning

confidence: 60%

“…The theory of Baumol's cost disease, proposed by William Baumol and co-authors [30][31][32][33], suggests that sectors with low labour productivity growth rates face relative cost and price increases compared to sectors with high labour productivity growth rates. While Baumol's theory is highly stylised, there is considerable evidence that the processes it describes play a role in shaping the economy in the US [34], the EU [35,36], South Korea [37] and across the OECD [38,39]. While there is evidence for the existence of Baumol's theories across these countries and regions, the strength of the effect varies in line with different contexts.…”

Section: Introductionmentioning

confidence: 99%

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Structural Change for a Post-Growth Economy: Investigating the Relationship between Embodied Energy Intensity and Labour Productivity

et al. 2020

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Post-growth economists propose structural changes towards labour-intensive services, such as care or education, to make our economy more sustainable by providing meaningful work and reducing the environmentally damaging production of material goods. Our study investigates the assumption underlying such proposals. Using a multi-regional input-output model we compare the embodied energy intensity and embodied labour productivity across economic sectors in the UK and Germany between 1995 and 2011. We identify five labour-intensive service sectors, which combine low embodied energy intensity with low growth in embodied labour productivity. However, despite their lower embodied energy intensities, our results indicate that large structural changes towards these sectors would only lead to small reductions in energy footprints. Our results also suggest that labour-intensive service sectors in the UK have been characterised by higher rates of price inflation than other sectors. This supports suggestions from the literature that labour-intensive services face challenges from increasing relative prices and costs. We do not find similar results for Germany, which is the result of low overall growth in embodied labour productivity and prices. This highlights that structural change is closely associated with economic growth, which raises the question of how structural changes can be achieved in a non-growing economy.

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Section: Baumol's Cost Disease As a Barrier To The Post-growth Transimentioning

confidence: 60%

Section: Introductionmentioning

confidence: 99%

Structural Change for a Post-Growth Economy: Investigating the Relationship between Embodied Energy Intensity and Labour Productivity

et al. 2020

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“…The authors doubted and re-confirmed this hypothesis which has eventually become one of the fundamental bases of economics of culture [Globerman, Book (1974), Schwarz, Greenfield (1981), Heilbrun (2003), Ginsburgh, Throsby (2006)]. It is to be noted that throughout the last decade, the obvious renaissance of the Baumol's theory is observed, boundaries of its application in other sectors of economics and macroeconomic researches extend [Neck, Getzner (2007), Nordhaus (2008), Pomp, Vujic (2008), Fernandez, Palazuelo (2012)].…”

mentioning

confidence: 83%

Studying “Sponsored Goods” in Cultural Sector Symptoms and Consequences of Baumol’s Cost Disease

Rubinstein

2012

Creative and Knowledge Society

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The present research is the first part of econometric study of the so called sponsored goods and looks at one of the most common types of such goods namely art products created by theaters, concert organizations and museums. The aim of the paper is to analyse the performance of Russian art organizations to find out to what extend the conditions of their functioning in post Soviet times under the development of market economy, democratization of leisure and changes in consumer preferences influence their economic results. Could Russian theaters, museums and concert organizations be self-sufficient in market economy established in Russian in 1991-2010?The set up task determined the object of the study and the statistical data to be used-40 years time series performance indicators that include equal time intervals-1971-1990 for performing arts organizations and 1991-2010-for theaters, concert organizations and museums. The specifics of calculations presented in the article result from the very approach to the testing of cost disease. Its essence is to reveal the symptoms of this disease in art organizations taken as an element of economy as a whole rather than only as a part of cultural activities. Accordingly a new method of diagnostics of the cost disease is suggested that is based on development of specific indexes measuring the lag of labor productivity, advancing dynamics of wages and priority growth in prices for tickets in relation to the corresponding indexes of macroeconomic dynamics as well as determination of cost disease consequences-the deficit of income of providers of cultural (art) goods. The implementation of such an approach allowed to construct three-dimensional space which coordinates describe the dynamics of performance results of art organizations.

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“…This mechanism entails a rapid increase of the production costs of cultural goods relative to the increase in the price of the final product. The consequence of this economic effect, confirmed by empirical studies [4][5][6][7][8] is an objective unprofitability of cultural organizations. However, in some sources [9], the authors suggest that such mechanisms of economic modeling and productivity optimization as marketing and management, as well as the development and creation of a new paradigm of culture can overcome the "disease of inefficiency" and "cure" any "cost disease".…”

Section: Introduction: the Theoretical Landscapementioning

confidence: 91%

Theoretical Regulations and Institutional Features of Financing Arts

Burakov¹,

Slavinskaya²

2018

jour

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The authors have analyzed organizations of the performing arts sector, one of the classic key benefits in the economy. The empirical research has been based on the economic pattern of “cost disease”. A unique statistical database has been compiled on the basis of the information database of the Federal State Statistics Service and the Ministry of culture of the Russian Federation. The research presents the Baumol’s indices calculations updated in 2001–2015. There have been confirmed such symptoms of Baumol’s cost disease as: labor productivity in cultural organizations lagging behind the average regional rate, super-inflationary growth for ticket prices in theaters, and catch-up wage growth in the theater in relation to the average wage level in the region. The author’s approach to the analysis of the Baumol’s cost disease is a modification of the overall Baumol index as a replacement for the income deficit indicator for the share of expenses covered by budget funds. New results have been obtained for estimating the income deficit and the share of expenditures covered by public funding by using the panel data model and quantile regression. The practical value of this research is the systematization of budgetary and extra-budgetary support for cultural organizations. New institutions of financial support such as the institute of participatory budgeting and the institution of individual budget allocations have been suggested to create favorable environment for the development of cultural organizations

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European Union Economies Facing ‘Baumol's Disease’ within the Service Sector*

Cited by 18 publications

References 25 publications

Structural Change for a Post-Growth Economy: Investigating the Relationship between Embodied Energy Intensity and Labour Productivity

Structural Change for a Post-Growth Economy: Investigating the Relationship between Embodied Energy Intensity and Labour Productivity

Studying “Sponsored Goods” in Cultural Sector Symptoms and Consequences of Baumol’s Cost Disease

Theoretical Regulations and Institutional Features of Financing Arts

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