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Disease or utopia? Testing Baumol in education

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  • Chen, Xin
  • Moul, Charles C.
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    Abstract

    Baumol’s Cost Disease offers a compelling hypothesis of rising unit costs in stagnant sectors, but increased productivity in progressive sectors may generate the same prediction through income effects. We examine quantity (rather than expenditure) data from the U.S. educational sector to distinguish between these explanations. Our results indicate significant negative impacts of manufacturing productivity on teacher–pupil ratios.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165176513005260
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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 122 (2014)
    Issue (Month): 2 ()
    Pages: 220-223

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    Handle: RePEc:eee:ecolet:v:122:y:2014:i:2:p:220-223

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    Web page: http://www.elsevier.com/locate/ecolet

    Related research

    Keywords: Education costs; Baumol cost disease; Teacher–pupil ratios;

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    1. Jochen Hartwig, 2011. "Can Baumol's model of unbalanced growth contribute to explaining the secular rise in health care expenditure? An alternative test," Applied Economics, Taylor & Francis Journals, vol. 43(2), pages 173-184.
    2. Robinson, Joan, 1969. "Macroeconomics of Unbalanced Growth: A Belated Comment," American Economic Review, American Economic Association, vol. 59(4), pages 633, Part I Se.
    3. Colombier, Carsten, 2012. "Drivers of health care expenditure: Does Baumol's cost disease loom large?," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 12-5, University of Cologne, FiFo Institute for Public Economics.
    4. Hartwig, Jochen, 2008. "What drives health care expenditure?--Baumol's model of 'unbalanced growth' revisited," Journal of Health Economics, Elsevier, vol. 27(3), pages 603-623, May.
    5. Bates, Laurie J. & Santerre, Rexford E., 2013. "Does the U.S. health care sector suffer from Baumol's cost disease? Evidence from the 50 states," Journal of Health Economics, Elsevier, vol. 32(2), pages 386-391.
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