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  3. American Economic Review
  4. October 2012
  5. The Rise of the Service Economy

The Rise of the Service Economy

  • Francisco J. Buera
  • Joseph P. Kaboski
American Economic Review
vol. 102, no. 6, October 2012
(pp. 2540-69)
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Abstract

This paper analyzes the role of specialized high-skilled labor in the disproportionate growth of the service sector. Empirically, the importance of skill-intensive services has risen during a period of increasing relative wages and quantities of high-skilled labor. We develop a theory in which demand shifts toward more skill- intensive output as productivity rises, increasing the importance of market services relative to home production. Consistent with the data, the theory predicts a rising level of skill, skill premium, and relative price of services that is linked to this skill premium. (JEL J24, L80, L90)

Citation

Buera, Francisco J., and Joseph P. Kaboski. 2012. "The Rise of the Service Economy." American Economic Review, 102 (6): 2540-69. DOI: 10.1257/aer.102.6.2540

Additional Materials

JEL Classification

  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • L80 Industry Studies: Services: General
  • L90 Industry Studies: Transportation and Utilities: General