Baumol effect
(en)
(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
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
notable
7 years, 7 months ago