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Inter-industries productivity gap and the services employment dynamics

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  • Jula, Dorin

    ()
    (Ecological University of Bucharest – Management Faculty, and Institute for Economic Forecasting, Romanian Academy)

  • Jula, Nicoleta

    ()
    (Nicolae Titulescu University, Bucharest – Finance and Accounting Faculty)

Abstract

The dynamics of employment in final services depends on a set of economic, social and cultural factors. On the other hand, the increase in the population incomes (and the influence of some national factors) leads to an increase in the demand for services. However, the relatively poor productivity (Baumol, Blackman and Wolff, 1989) also determines the increase in prices, this evolution leading to a decrease in the demand for services. In the paper, the conditions in which the effect induced by the demand-income elasticity over the dynamics of the services surpasses the substitution effect generated by the demand-price elasticity are analyzed so that the growth rate of the production in the service sector is higher than the growth rate of the productivity in the same sector. From the different evolution of the two variables results the long-term growth of the share of employment in services in the total employment at the national level.

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Bibliographic Info

Article provided by Institute for Economic Forecasting in its journal Romanian Journal of Economic Forecasting.

Volume (Year): 4 (2007)
Issue (Month): 2 (June)
Pages: 5-15

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Handle: RePEc:rjr:romjef:v:4:y:2007:i:2:p:5-15

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Keywords: Labor productivity; employment; services; price elasticity and income elasticity of demand for services;

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  1. Oulton, Nicholas, 2001. "Must the Growth Rate Decline? Baumol's Unbalanced Growth Revisited," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 605-27, October.
  2. Gronroos, Christian & Ojasalo, Katri, 2004. "Service productivity: Towards a conceptualization of the transformation of inputs into economic results in services," Journal of Business Research, Elsevier, vol. 57(4), pages 414-423, April.
  3. Anita Wölfl, 2004. "Productivity Growth in Services Industries: Is There a Role for Measurement?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 66-80, Spring.
  4. Baumol, William J & Blackman, Sue Anne Batey & Wolff, Edward N, 1985. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 806-17, September.
  5. Erwin Diewert, 2005. "Progress in Service Sector Productivity Measurement: Review Article on "Productivity in the U.S. Services Sector: New Sources of Economic Growth"," International Productivity Monitor, Centre for the Study of Living Standards, vol. 11, pages 57-69, Fall.
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