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The Rise of Services: The Role of Skills, Scale, and Female Labor Supply

Francisco Buera (), Joseph Kaboski and Min Qiang (Kent) Zhao

Journal of Human Capital, 2019, vol. 13, issue 2, 157 - 187

Abstract: This paper provides a quantitative analysis of the growth in the service share in the United States. We model households that make decisions on home and market production of services that vary in their skill intensity at any point in time and vary in their optimal scale over time. We also allow for skill- and sector-biased technology progress. The benchmark model fully accounts for the rise in the service share, with the rising scale of services, rising demand for skill-intensive output, and skill-biased technical change all playing dominant roles. Furthermore, the model with multiperson households confirms that the essential findings of our benchmark model are robust to demographic considerations. It can explain two-thirds of the increase in female labor supply, which also plays a role in services growth.

Date: 2019
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Working Paper: The Rise of Services: the Role of Skills, Scale, and Female Labor Supply (2013) Downloads
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