Disease or Utopia? Testing Baumol in Education

8 Pages Posted: 26 Jun 2013 Last revised: 25 Oct 2013

See all articles by Xin Chen

Xin Chen

Independent

Charles C. Moul

Miami University of Ohio - Department of Economics

Date Written: June 25, 2013

Abstract

Baumol's Cost Disease offers a compelling hypothesis of rising unit costs in stagnant sectors, but increased productivity in progressive sectors may generate the same prediction through income effects. We examine quantity (rather than expenditure) data from the U.S. educational sector to distinguish between these explanations. Our results indicate significant negative impacts of manufacturing productivity on teacher-pupil ratios.

Keywords: Education costs, Baumol cost disease

JEL Classification: I20, O40

Suggested Citation

Chen, Xin and Moul, Charles C., Disease or Utopia? Testing Baumol in Education (June 25, 2013). Available at SSRN: https://ssrn.com/abstract=2285006 or http://dx.doi.org/10.2139/ssrn.2285006

Xin Chen

Independent

Charles C. Moul (Contact Author)

Miami University of Ohio - Department of Economics ( email )

Farmer School of Business
Oxford, OH 45056
United States

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