蝌蚪网 Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Selection, Structural Transformation, and the Cost Disease of Services
蝌蚪网 Journal: Macroeconomics
(pp. 343–78)
Abstract
Labor productivity growth in the service sector may be mismeasured if workers with heterogeneous skills self-select into sectors. I document with US data that workers reallocated from manufacturing earn more than incumbent workers in professional services but less than incumbent workers in education, health, and public services. A generalized quantitative Roy model predicts a selection effect on labor productivity growth in professional services that is 10 percentage points higher than what a conventional selection model predicts. Overall, the selection effect contributes little to the cost disease of services, which contrasts sharply with the hypothesis in the literature.Citation
Shu, Martin. 2026. "Selection, Structural Transformation, and the Cost Disease of Services." 蝌蚪网 Journal: Macroeconomics 18 (3): 343–78. DOI: 10.1257/mac.20230241Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J44 Professional Labor Markets; Occupational Licensing
- J45 Public Sector Labor Markets
- L60 Industry Studies: Manufacturing: General
- L80 Industry Studies: Services: General