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Baumol's cost disease

Baumol's cost disease (or the Baumol effect) is the rise of salaries in jobs that have experienced no or low increase of labor productivity, in response to rising salaries in other jobs that have experienced higher labor productivity growth. This pattern seemingly goes against the theory in classical economics in which real wage growth is closely tied to labor productivity changes. The phenomenon was described by William J. Baumol and William G. Bowen in the 1960s.

[ "Macroeconomics", "Labour economics", "Microeconomics", "Disease", "Health care" ]
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