Structural Change within the Service Sector and the Future of Baumol's Disease

53 Pages Posted: 12 Dec 2017 Last revised: 31 Oct 2019

See all articles by Georg Duernecker

Georg Duernecker

University of Mannheim

Berthold Herrendorf

Arizona State University (ASU) - Economics Department

Akos Valentinyi

University of Manchester; CERS-HAS; CEPR

Date Written: November 2017

Abstract

Structural change contributed to the past slowdown of U.S. productivity growth by reallocating production to stagnant services sectors with low productivity growth. We ask what the future effect of structural change on productivity growth will be. To provide an answer, we study structural change among goods and different services. We find that there are substitutes for stagnant services, which prevents them from taking over the economy in the long run. Our calibrated model implies that in the future structural change will reduce aggregate productivity growth in the U.S. only by about half as much as in the past.

Keywords: Baumol's Disease, Productivity Growth Slowdown, Service Sector, structural change

JEL Classification: O41, O47, O51

Suggested Citation

Duernecker, Georg and Herrendorf, Berthold and Valentinyi, Akos, Structural Change within the Service Sector and the Future of Baumol's Disease (November 2017). CEPR Discussion Paper No. DP12467, Available at SSRN: https://ssrn.com/abstract=3082293

Georg Duernecker (Contact Author)

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

Berthold Herrendorf

Arizona State University (ASU) - Economics Department ( email )

Tempe, AZ 85287-3806
United States

Akos Valentinyi

University of Manchester ( email )

Arthur Lewis Building
Oxford Road
Manchester, M13 9PL
United Kingdom

CERS-HAS ( email )

Budaorsi ut 45
Budapest, 1112
Hungary

CEPR

London
United Kingdom

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
1
Abstract Views
1,382
PlumX Metrics