baumol effect
Word Rarity
Very rare
Frequency: Zipf frequency 1.38 in modern English
24
Scrabble Score
12
Letters
4
Syllables
10
Unique Chars
Meaning
name
A theorem stating that there is a tendency for wages in jobs that have experienced little or no increase in labor productivity to rise in response to rising wages in other jobs that did experience high productivity growth.
Example Sentences
- "The Baumol effect may arise if (i) price inflation in the medical sector changes HCE, (ii) macroeconomic labour productivity changes due ot ageing, and (iii) labour productivity change in the health care sector lags behind labour productivity change in the rest of the economy."
- "Tabarrok prefers to call it the Baumol effect, because it is an inevitable consequence of the falling costs of production (and hence prices) of some goods, that other goods will become relatively more expensive."
Etymology
Introduced by William J. Baumol.