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(aka Baumol's cost disease) rise of salaries in jobs that have experienced no increase of labor productivity, in response to rising salaries in other jobs that have experienced the labor productivity growth

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baumol effect
cost disease



Historically this has meant that measured productivity has grown more slowly in public services than in other parts of the economy--the so-called 'Baumol effect'

—p.246 A moving backdrop (217) by John Hills
notable
6 years, 8 months ago


O'Connor mounting pressure on state finances by public-sector trade unions claiming the same wages and benefits as workers in private industry and thereby exposing the state to the ‘cost disease’ of the service sector

referring to Marxist theorist James O'Connor. cites William J Baumol's "Macroeconomics of Unbalanced Growth" here

—p.115 The Rise of the European Consolidation State (113) by Wolfgang Streeck
notable
6 years, 7 months ago


Such a bias arises in an acute form in what is known as the Baumol effect, after the US economist William J. Baumol, who argued that productivity grows faster in certain sectors than in others, and that in some sectors there was no scope for producing more output per person.

example given: if cars can be built more quickly, and wages rise in line with manufacturing productivity, then the fact that you can't make (say) education more "productive" the same way means the relative cost of education will be higher

—p.121 Technological Change and Countervailing Power (115) by Anthony B. Atkinson
notable
6 years, 11 months ago


Baumol's cost disease means that the cost of many critical sectors in an economy tends to rise over time

—p.69 In Search of a Better Sponge (64) by Ryan Avent
notable
6 years, 4 months ago


The problem that Baumol and Bowen identified was subtler than that: They named a condition called "cost disease." While classical music hasn't grown any more productive, the cost of producing it keeps increasing.

—p.172 Death of the Author (156) by Franklin Foer
notable
6 years, 5 months ago