The Growth of Service Industries
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The Growth of Service Industries

The Paradox of Exploding Costs and Persistent Demand

Edited by Thijs ten Raa and Ronald Schettkat

Problems arise if budgets for services are held constant whilst prices rise. Education, cultural activities and health services are under constant budgetary pressure. The authors argue that the price of commodities is linked to demand and price increases would therefore seem to threaten the very existence of these services. The paradox of these services is that in spite of their exploding costs, demand persists.
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Chapter 3: Employment growth, structural change and capital accumulation

Esra Erdem and Andrew Glyn

Extract

3. Employment growth, structural change and capital accumulation Esra Erdem and Andrew Glyn1 Declining agriculture and, more recently, deindustrialization and the expansion of services have shaped the labour market performance of individual OECD countries. It is now widely accepted that there is a strong structural component to unemployment and non-employment in OECD countries. This chapter examines the post-1950 patterns of structural change in a slightly longer perspective. One objective is to highlight the differing labour market experience of men and women. A second focus is on the relation between capital stock growth and the pattern of employment. Section 1 presents and analyses the longer-run trends. Section 2 examines the relationship between structural change and employment performance as a whole, especially its impact on economic inactivity and on the comparative employment experience of Europe and the USA since 1973. The basic labour market data set is for a sample of OECD countries, based on Maddison (1991), supplemented by estimates of the gender split of employment (Bairoch et al. 1968), and updated from OECD sources (see data Appendix). Maddison’s data go back to 1870, and some of the charts include estimates for that year; but the 1870 data are particularly rough and the statistical analysis is confined to the three sub-periods 1913–50, 1950–73 and 1973–94, mostly with a restricted sample of eight countries (G7 plus the Netherlands) for which capital stock data are available. The Appendix provides a number of tables with country detail for sectoral employment shares...

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