NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Rise of Services: the Role of Skills, Scale, and Female Labor Supply

Francisco J. Buera, Joseph P. Kaboski, Min Qiang Zhao

NBER Working Paper No. 19372
Issued in August 2013
NBER Program(s):   DEV   EFG   LS

This paper quantifies the roles of increases in the demand for skill-intensive output, the efficient scale of service production, and female labor supply in the growth of services. We extend the Buera and Kaboski (2012a,b) model to a two-person household, incorporating a joint decision on home and market production, and allow for skill and sectoral biased technology progress. The rising scale of services, the rising demand for skill-intensive output, and skill-biased technical change all play dominant roles. Furthermore, the extended model explains the majority of the increase in female labor supply, which also plays a role in services growth.

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