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

Akos Valentinyi, Berthold Herrendorf and Georg Duernecker

No 12467, CEPR Discussion Papers from Centre for Economic Policy Research

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 (search for similar items in EconPapers)
JEL-codes: O41 O47 O51 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-eff and nep-tid
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Citations: View citations in EconPapers (46)

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