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Creativity and the positive reading of Baumol cost disease

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  • Sergio Sparviero
  • Paschal Preston

Abstract

This paper proposes a more positive and useful reading of cost disease. A case is presented for refocussing general attention from the characteristics of cost disease (i.e. widening production cost and price gap between the product of progressive and stagnant industries) to its sources. This is a useful exercise because the most important aspect of cost disease is a fundamental intuition: some types of labour provide particular contributions to various production processes that capital and new technologies are not able to replace. The implications of these findings are discussed.

Suggested Citation

  • Sergio Sparviero & Paschal Preston, 2008. "Creativity and the positive reading of Baumol cost disease," The Service Industries Journal, Taylor & Francis Journals, vol. 30(11), pages 1903-1917, October.
    • Handle: RePEc:taf:servic:v:30:y:2008:i:11:p:1903-1917
    DOI: 10.1080/02642060802627541
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    References listed on IDEAS

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    1. Robert J. Gordon, 2004. "Five Puzzles in the Behavior of Productivity, Investment, and Innovation," NBER Working Papers 10660, National Bureau of Economic Research, Inc.
    2. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
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