Creativity and the Positive Reading of Baumol Cost Disease

The Service Industries Journal, Vol. 30, No. 12, 2010

17 Pages Posted: 10 Jan 2010 Last revised: 30 May 2012

Sergio Sparviero

University of Salzburg

Paschal Preston

Dublin City University

Date Written: December 1, 2010

Abstract

In this paper we propose a more positive and useful reading of the cost disease. We present a case for refocussing the general attention from the characteristics of the cost disease (i.e. the widening production cost and price gap between the product of progressive and stagnant industries) to its sources. This is a useful exercise because the most important aspect of the cost disease is a fundamental intuition: some types of labour provide particular contributions to various production processes that capital and new technologies are not able to replace. We also discuss the implications of these findings.

Keywords: New Economy, Labor Productivity, Creative Industries, Baumol's Cost Disease, Unbalance Growth

JEL Classification: J3, L8, O3

Suggested Citation

Sparviero, Sergio and Preston, Paschal, Creativity and the Positive Reading of Baumol Cost Disease (December 1, 2010). The Service Industries Journal, Vol. 30, No. 12, 2010. Available at SSRN: https://ssrn.com/abstract=1531602

Sergio Sparviero (Contact Author)

University of Salzburg ( email )

Akademiestra├če 26
Salzburg, Salzburg 5020
Austria

Paschal Preston

Dublin City University ( email )

Ireland 9
Dublin 9, leinster 9
Ireland
3531 7005478 (Phone)

HOME PAGE: http://www.comms.dcu.ie/prestonp/

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