TY  - JOUR
AU  - Buera,Francisco J.
AU  - Kaboski,Joseph P.
TI  - The Rise of the Service Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14822
PY  - 2009
Y2  - March 2009
UR  - http://www.nber.org/papers/w14822
L1  - http://www.nber.org/papers/w14822.pdf
N1  - Author contact info:
Francisco J. Buera
Department of Economics
University of California, Los Angeles
8283 Bunche Hall Office 8357
Mail Stop: 147703
Los Angeles, CA 90095
Tel: 310/825-8018
Fax: 310/825-9528
E-Mail: fjbuera@econ.ucla.edu

Joseph P. Kaboski
Department of Economics and Econometrics
University of Notre Dame
434 Flanner Hall
Notre Dame, IN 46556
Tel: 574-631-9906
E-Mail: jkaboski@nd.edu
AB  - This paper analyzes the role of specialized high-skilled labor in the growth of the service sector as a share of the total economy. Empirically, we emphasize that the growth has been driven by the consumption of services. Rather than being driven by low-skill jobs, the importance of skill-intensive services has risen, and this has coincided with a period of rising relative wages and quantities of high-skilled labor. We develop a theory where demand shifts toward ever more skill-intensive output as income rises, and because skills are highly specialized this lowers the  importance of home production relative to market services. The theory is also consistent with a rising level of skill and skill premium, a rising relative price of services that is linked to this skill premium, and rich product cycles between home and market, all of which are observed in the data.
ER  -