Economic Growth and the Rise of Service Employment

32 Pages Posted: 30 Jan 2002

See all articles by Victor R. Fuchs

Victor R. Fuchs

National Bureau of Economic Research (NBER)

Date Written: June 1980

Abstract

The distribution of employment among Agriculture, Industry, and Service within countries is closely related to the level of real Gross Domestic Product per capita. As real income rises, Agriculture's share falls, Service employment rises, and Industryâ€TMs share rises to a peak at about $3,300 (1970 dollars) per capita and then declines. U.S. time series and OECD cross-sections follow almost identical patterns of employment change. The decline of Agriculture is attributable primarily to differences in income elasticity of demand but the shift from Industry to Service is attributable primarily to differential rates of growth of output per worker. Economic growth also contributes to the rise of service employment through an increase in female labor force participation because families with working wives tend to spend a higher proportion of their income on services. Productivity tends to grow less rapidly in the Service sector than in the rest of the economy, but the shift of employment to Services was not a major factor in the slowing of aggregate productivity in the United States in the 1970's.

Suggested Citation

Fuchs, Victor R., Economic Growth and the Rise of Service Employment (June 1980). NBER Working Paper No. w0486. Available at SSRN: https://ssrn.com/abstract=262708

Victor R. Fuchs (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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