The Industrial Revolution in Services

Chang-Tai Hsieh and Esteban Rossi-Hansberg

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: The U.S. has experienced an industrial revolution in services. Firms in service industries, those where output has to be supplied locally, increasingly operate in more markets. Employment, sales, and spending on fixed costs such as R&D and managerial employment have increased rapidly in these industries. These changes have favored top firms the most and have led to increasing national concentration in service industries. Top firms in service industries have grown entirely by expanding into new local markets that are predominantly small and mid-sized U.S. cities. Market concentration at the local level has decreased in all U.S. cities but by significantly more in cities thatwere initially small. These facts are consistent with the availability of a new menu of fixed-cost-intensive technologies in service sectors that enable adopters to produce at lower marginal costs in any markets. The entry of top service firms into new local markets has led to substantial unmeasured productivity growth, particularly in small markets.

Pages: 46 pages
Date: 2021-10
New Economics Papers: this item is included in nep-bec, nep-com, nep-geo, nep-ore, nep-tid and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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https://www2.census.gov/ces/wp/2021/CES-WP-21-34.pdf First version, 2021 (application/pdf)

Related works:
Journal Article: The Industrial Revolution in Services (2023)
Working Paper: The Industrial Revolution in Services (2019)
Working Paper: The Industrial Revolution in Services (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:21-34

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