The Rise of the Service Economy

Francisco Buera and Joseph Kaboski

No 14822, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the role of specialized high-skilled labor in the growth of the service sector as a share of the total economy. Empirically, we emphasize that the growth has been driven by the consumption of services. Rather than being driven by low-skill jobs, the importance of skill-intensive services has risen, and this has coincided with a period of rising relative wages and quantities of high-skilled labor. We develop a theory where demand shifts toward ever more skill-intensive output as income rises, and because skills are highly specialized this lowers the importance of home production relative to market services. The theory is also consistent with a rising level of skill and skill premium, a rising relative price of services that is linked to this skill premium, and rich product cycles between home and market, all of which are observed in the data.

JEL-codes: D13 J22 J24 O14 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-hrm and nep-lab
Note: EFG
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Citations: View citations in EconPapers (18)

Published as Francisco J. Buera & Joseph P. Kaboski, 2012. "The Rise of the Service Economy," American Economic Review, American Economic Association, vol. 102(6), pages 2540-69, October.

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Related works:
Journal Article: The Rise of the Service Economy (2012)
Working Paper: The Rise of the Service Economy (2006)
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