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Journal of Applied Sciences
  Year: 2014 | Volume: 14 | Issue: 5 | Page No.: 482-488
DOI: 10.3923/jas.2014.482.488
Study on the Effect of Rising Service Employment on Productivity Growth in China: A Test of Baumol’s Model
Zheng Dequan and Ding Yunlong

Abstract:
The effects of increasing employment share of services on the real GDP growth have been investigated by a series of theoretical and empirical analysis for developed countries. In contrast, there are few empirical test studies of such effects on macro economies for developing countries. Based on the extended Baumol’s model, this study provides an empirical analysis of the causes of employment shift and the impact of rising share of services on the productivity growth in China. Though the GDP share and the employment share of services has been increasing secularly for decades in China, the growth rate of labor productivity in services is slightly higher than that in manufacturing. The results have not confirmed the Baumol’ hypothesis because of the low labor productivity in manufacturing and large number of rural labor. Furtherly, the regression analysis shows that there is the potential possibility of "cost disease" in China. This study empirically tests the impact of the rising services on the overall economy and can help to develop appropriate industrial policies for developing countries.
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How to cite this article:

Zheng Dequan and Ding Yunlong, 2014. Study on the Effect of Rising Service Employment on Productivity Growth in China: A Test of Baumol’s Model. Journal of Applied Sciences, 14: 482-488.

DOI: 10.3923/jas.2014.482.488

URL: https://scialert.net/abstract/?doi=jas.2014.482.488

 
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