Will the new information economy cure the cost disease in the USA?

Mattey, Joe P.

doi:10.4337/9781781951231.00015

Cited by 4 publications

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“…In 2001, Baumol (2001) empirically confirms his theory, as well as the predicted, so-called cost disease in the service sector. Mattey (2001) also indicates that the United States has 'fallen ill' with a "cost disease" in the service sector. "Productivity growth in the service sector has been quite weak, boosting production costs and prices of services.…”

Section: Introductionmentioning

confidence: 99%

General Patterns and Drivers of Changes in Employment Structure: Evidence from Five European Countries

Yakymova

2020

SAEB

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This paper seeks to answer whether the general patterns and drivers of the sectoral employment shifts depend on a country’s level of development. To accomplish this, we examined employment in Germany, Hungary, Poland, Romania and Ukraine at the national level (1998-2018) using econometric analysis, and at the regional NUTS2 level (2009-2018) using shift-share analysis. We obtained evidence that the general trend is the service sector expansion. Using the ARDL approach and the Granger causality test, we identified long-run unidirectional causality running from income proxies to employment in services in all countries except Romania, where the opposite causality was found. We revealed that household income moderates the impact of urbanization on service sector growth in all countries except Poland. At the regional level, the change in the employment rate in services is explained by the national growth effect and slightly by the industry-mix effect if the active phase of structural changes is completed.

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Section: Introductionmentioning

confidence: 99%

General Patterns and Drivers of Changes in Employment Structure: Evidence from Five European Countries

Yakymova

2020

SAEB

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“…Several theoretical extensions of Baumol's model have been proposed, introducing the economies of scale (Schwarz, 1986), the international trade (Guccione and Gillen, 1990), the microfoundation of consumer demand in an imperfect competitive framework (Brunello and Scaramozzino, 1992), the role of investment in determining the dynamic equilibrium path and the role of intersectoral transfers in improving the employment performances of the economy (De Vincenti, 2000), the relationship between employment and output shares on the one hand and price and income elasticities on the other (Appelbaum and Schettkat, 2001). 5 A body of empirical research has been devoted to analyse productivity trends in services (Baumol et al ., 1985, 1989; Kendrick, 1985; Pellegrini, 1993; Boitani and Pellegrini, 1997; Mattey, 2001; Mohnen and ten Raa, 2001; Nordhaus, 2006) and final product productivity (Russo and Schettkat, 2001); to measure price and income elasticities of demand for goods and services (Summers, 1985; Borooah, 1987; Siracusano, 1990; De Vincenti et al ., 1999; Moller, 2001); to the employment benefits of having the right proportion between services and industry (Appelbaum and Schettkat, 1994; Sestito, 1997; Simonazzi and Villa, 1999). 6…”

Section: Introductionmentioning

confidence: 99%

‘Baumol's Disease’, Production Externalities and Productivity Effects of Intersectoral Transfers

Vincenti¹

2007

Metroeconomica

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This paper presents a model that introduces in an unbalanced growth framework à la Baumol the hypothesis of an endogenous productivity growth due to a positive externality of the service sector on manufacturing productivity and a learning-by-doing process inside both sectors. The model shows that a policy aimed at keeping the ratio between outputs in the two sectors constant in real terms may improve the aggregate productivity performance of the economy, depending on the parameters' values. Then the model derives the dynamics of the intersectoral transfer which is necessary to keep the ratio between outputs constant, and verifies that the amount of the transfer turns out to be always lower than the output of the manufacturing sector, and only asymptotically approaches it.

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“…Table 2 in the Appendix shows the evolution of the service share in total GDP over the period , and the evolution of the services share in total expenditure 6 (in real and nominal terms), for the US, the UK and France: in real terms, the shares in total GDP and in total expenditure remained constant, except for the US where they both increase, whereas in nominal terms all the three countries exhibit a massive increase. 7 In more recent analysis focused on the US (see Appelbaum and Schettkat, 1999;Mattey, 2001), it is presented evidence of increasing relative prices of services, together with an increasing share of services in nominal product, while the share of services in real output is shown to be more or less constant until the mid-1970s and to be increasing since then. 4.…”

Section: Stylized Factsmentioning

confidence: 99%

“…In this respect, a consequence of the application of ICT is the possibility of separating production and consumption for many service activities, increasing their "stockability" and "transferability". For evidence and discussions on the impact of ICT on sectoral productivities, see Petit and Soete (1997), Mattey (2001), Triplett (2003), O' Mahony and van Ark (2003).…”

Section: Theoretical Literaturementioning

confidence: 99%

Endogenous growth and changing sectoral composition in advanced economies

Bonatti

Felice

2008

Structural Change and Economic Dynamics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Luigi Bonatti* and Giulia Felice** Terms of use: Documents in Endogenous growth and changing sectoral composition in advanced economies ABSTRACTDespite the striking evidence of the changing sectoral composition in employment and output shares characterizing the growth process, structural change is usually disregarded in growth modeling. In contrast,we focus on how structural change can affect aggregate growth by presenting a two-sector model with a "progressive" industry ("manufacturing"), which exhibits endogenous technological progress and produce both for consumption and for investment, and a technologically "stagnant" industry ("services"), which produces only for consumption. Within this framework, we show under what conditions on preferences perpetual growth can be generated. In particular, the paper demonstrates that positive long-term growth is possible even if what households spend on services tends to increase more than proportionally than their total consumption expenditure, namely when preferences are non-homothetic. This is at odds with previous literature arguing that Baumol's "asymptotic stagnancy" applies when the stagnant industries supply final products. Moreover, the paper does not limit its attention to the balanced growth path: numerical examples illustrate how the transition path displays the regularities which appear to characterize the structural dynamics in advanced economies.

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Will the new information economy cure the cost disease in the USA?

Cited by 4 publications

References 0 publications

General Patterns and Drivers of Changes in Employment Structure: Evidence from Five European Countries

General Patterns and Drivers of Changes in Employment Structure: Evidence from Five European Countries

‘Baumol's Disease’, Production Externalities and Productivity Effects of Intersectoral Transfers

Endogenous growth and changing sectoral composition in advanced economies

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