The Shift to Services: A Review of the Literature

Abstract

The present paper provides an overview of literature on the shift to services. It follows the three dimensions of structural change - final demand, the inter-industry division of labor and inter-industry productivity differences. It first looks at the "classics", however (Fisher (1935), Clark (1940), Fourastie (1949), Baumol (1967, 2001), and Fuchs (1968)). Next, it treats studies analyzing differences in service-industry employment, and offers a discussion of studies focussing on final demand as an explanation of higher service shares in GDP. It also provides an overview of studies analyzing the inter-industry division of labor on the basis of input-output data. Finally, it discusses studies following Baumol's cost-disease hypothesis.

Keywords: structural economic change, service industries, economic development, productivity, employment

JEL Classification: E2, J2, J3, L0, L8, O1, O3, O4, N1