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The Growth of Service Industries

The Paradox of Exploding Costs and Persistent Demand Edited by Thijs ten Raa, Associate Professor of Economics, Tilburg University, The Netherlands and Ronald Schettkat, Bergische Universitaet Wuppertal, Germany
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.
Extent: 240 pp
Hardback Price: $128.00 Web: $115.20
Publication Date: 2001
ISBN: 978 1 84064 422 7
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  • eISBN: 978 1 78195 123 1

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  • Economics and Finance
  • Industrial Economics
  • Services
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.

Policymakers struggle with the problematic question of whether to limit public service budgets as costs for their provision rise. The service sectors of advanced economies are surprisingly vigorous – the employment of an ever increasing share of the labour force is one phenomenon. Economists are perplexed by the interplay of slow service and fast goods productivity growth and wonder why the demand for services is so persistent.

The Growth of Service Industries is intended for use by both policymakers and economists and serves as a useful introduction to service productivity analysis.
‘This stimulating book . . . is largely devoted to these two paradoxes, with a particular focus on the second one.’
– Jean Gadrey, The Service Industries Journal

‘. . . the main benefit of The Growth of Service Industries is that it deals with one of the key issues in the modern economy. Policymakers struggle with the problematic question of whether to limit public service budgets as costs for their provision rise. Economists are perplexed by the interplay of slow service and fast goods productivity growth and wonder why the demand for services is so persistent. In that respect at least, The Growth of Service Industries is intended for use by both policymakers and economists and serves as a useful introduction to service productivity analysis.’
– Frederic Jallat, International Journal of Service Industry Management

‘This book includes a collection of articles that every student of the dynamics of growth of service industries in industrialized economies will want to read.’
– Rene Durand, Economic Systems Research
Contributors: E. Appelbaum, W. Baumol, E. Erdem, A. Glyn, S. Machin, J. Mattey, P. Mohnen, J. Möller, Th. ten Raa, G. Russo, R. Schettkat
Contents: Foreword Part I: The Amazing Vigour of the Services Part II: Supply-side Reasons for Employment Shifts Part III: The Cost Disease of the Services Part IV: Demand-side Reasons for Services Persistence Part V: Conclusions Index