What is it about?
First, we present an analysis of the supply side of the cost disease, when services and manufacturing play their role both in the intermediate and final demand. Second, we consider a CES utility function for the consumer, which is a function of two commodity services and manufacturing.
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Why is it important?
When productivity rises cumulatively in one sector relative to its rate of growth elsewhere in the economy, while wages rise commensurately in all areas, then relative costs in the nonprogressive sectors must inevitably rise.
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This page is a summary of: Cost disease in service sector, Service Industries Journal, March 2017, Taylor & Francis, DOI: 10.1080/02642069.2017.1306056.
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