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Time and productivity growth in services: how motion pictures industrialized entertainment

  • Gerben Bakker

When taking into account time, services can experience similar productivity gains as manufacturing. Motion pictures constituted the first technology that industrialized a labour-intensive service. Measuring output in time spent consuming them doubles output growth from 4.2 to as much as 9 percent per annum, accounting for 2 percent of U.S. GDP-growth between 1900 and 1938. Pure productivity growth caused 60 percent of this, their growing GDP-share 24 percent, and input transfers and physical capital each 8 percent. Falling ticket prices and rising opportunity costs kept the full-cost per spectator-hour constant, suggesting that the surge in demand was caused by rising full incomes and entertainment’s high income elasticity. Imploding prices limited the pictures’ expenditure share and made the economic impact go largely unnoticed.

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File URL: http://eprints.lse.ac.uk/27866/
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Paper provided by London School of Economics and Political Science, Department of Economic History in its series Economic History Working Papers with number 27866.

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Length: 72 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:ehl:wpaper:27866
Contact details of provider: Postal: LSE, Dept. of Economic History Houghton Street London, WC2A 2AE, U.K.
Phone: +44 (0) 20 7955 7084
Web page: http://www.lse.ac.uk/economicHistory/

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