Cost disease
Disease or Utopia? Testing Baumol
in Education (with Xin Chen), Economics Letters (2014),
122(2):220-223.
Abstract: Baumol’s Cost Disease offers
a compelling hypothesis of rising unit costs in stagnant sectors, but increased
productivity in progressive sectors may generate the same prediction through
income effects. We examine quantity (rather than expenditure) data from the
U.S. educational sector to distinguish between these explanations. Our results
indicate significant negative impacts of manufacturing productivity on
teacher-pupil ratios.