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The Service Productivity and Quality Challenge

  • Patrick T. Harker

Part of the International Studies in the Service Economy book series (ISSE, volume 5)

Table of contents

  1. Front Matter
    Pages i-vi
  2. Ranjit S. Dighe, Joseph F. Francois, Kenneth A. Reinert
    Pages 43-80
  3. David E. Lebow, Daniel E. Sichel
    Pages 81-112
  4. Bernard Hoekman
    Pages 113-137
  5. Uday M. Apte, Richard O. Mason
    Pages 169-202
  6. Severin Borenstein, Jeffrey K. MacKie-Mason, Janet S. Netz
    Pages 225-250
  7. Johannes M. Pennings
    Pages 251-280
  8. Uday M. Apte, Richard A. Cavaliere, G. G. Hegde
    Pages 281-310
  9. Gabriel R. Bitran, Stephen M. Gilbert, Thin-Yin Leong
    Pages 343-363
  10. Harold O. Fried, C. A. Knox Lovell, Philippe Vanden Eeckaut
    Pages 365-390
  11. Robert W. Crandall, Jonathan Galst
    Pages 391-405
  12. Edward K. Morlok, John P. Sammon, Lazar N. Spasovic, Linda K. Nozick
    Pages 407-434
  13. John E. Chubb, Terry M. Moe
    Pages 435-469
  14. Jess S. Boronico, Michael A. Crew, Paul R. Kleindorfer
    Pages 471-492
  15. Back Matter
    Pages 493-509

About this book

Introduction

3 While all of these explanations seem to have merit, there is one dominant reason why the percentage of GDP and employment dedicated to services has continued to increase: low productivity. According to Baumol's cost disease hypothesis (Baumol, Blackman, and Wolff 1991), the growth in services is actually an illusion. The fact is that service-sector productivity is improving slower than that of manufacturing and thus, it seems as if we are consuming more services in nominal terms. However, in real terms, we are consuming slightly less services. That is, the increase in the service sector is caused by low productivity relative to manufacturing. The implication of Baumol's cost disease is the following. Assuming historical productivity increases for manufacturing, agriCUlture, education and health care, Baumol (1992) shows that the U. S. can triple its output in all sectors within 50 years. However, due to the higher productivity level for manufacturing and agriculture, it will take substantially more employment in services to achieve this increase in output. To put this argument in perspective, simply roll back the clock 100 years or so and replace the words manufacturing with agriculture, and services with manufacturing. The phenomenal growth in agricultural productivity versus manufacturing caused the employment levels in agriculture in the U. S. to decrease rapidly while producing a truly unbelievable amount of food. It is the low productivity of services that is the real culprit in its growth of GDP and employment share.

Keywords

Business Import Management Performance information technology production productivity

Editors and affiliations

  • Patrick T. Harker
    • 1
  1. 1.Department of Systems EngineeringUniversity of PennsylvaniaPhiladelphiaUSA

Bibliographic information

  • DOI https://doi.org/10.1007/978-94-011-0073-1
  • Copyright Information Kluwer Academic Publishers 1995
  • Publisher Name Springer, Dordrecht
  • eBook Packages Springer Book Archive
  • Print ISBN 978-94-010-4036-5
  • Online ISBN 978-94-011-0073-1
  • Series Print ISSN 0924-6363
  • Buy this book on publisher's site