Working Paper: NBER ID: w19372
Authors: Francisco J. Buera; Joseph P. Kaboski; Min Qiang Zhao
Abstract: This paper quantifies the roles of increases in the demand for skill-intensive output, the efficient scale of service production, and female labor supply in the growth of services. We extend the Buera and Kaboski (2012a,b) model to a two-person household, incorporating a joint decision on home and market production, and allow for skill and sectoral biased technology progress. The rising scale of services, the rising demand for skill-intensive output, and skill-biased technical change all play dominant roles. Furthermore, the extended model explains the majority of the increase in female labor supply, which also plays a role in services growth.
Keywords: services; skills; female labor supply; economic growth; structural change
JEL Codes: J11; J22; O14; O33; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increases in demand for skill-intensive output (J24) | growth of services (L84) |
| efficient scale of service production (D24) | growth of services (L84) |
| female labor supply (J21) | growth of services (L84) |
| skill-biased technical change (SBTC) (J24) | growth of services (L84) |
| increase in relative wages and quantities of high-skilled workers (J24) | increase in demand for market services (J23) |
| increase in demand for skill-intensive services (J24) | increased returns on specialized human capital (J24) |
| increased returns on specialized human capital (J24) | higher wages for skilled workers (J31) |
| higher wages for skilled workers (J31) | decrease in home production time (D13) |
| decrease in home production time (D13) | increase in demand for market services (J23) |
| rising scale of services (L80) | growth of the service economy (O14) |