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MENTAL MODEL · M1706

Baumol's Cost Disease

Baumol's Cost Disease
BusinessHigh supportEconomics
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

The productivity growth in services lags behind manufacturing, yet wages must converge, causing the relative costs of labor-intensive industries (such as arts and care) to rise continuously.

SCAFFOLDING EFFECT

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Low-efficiency services see rising wages, leading to structurally escalating costs.

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Baumol's cost disease refers to the phenomenon where, as some sectors (e.g., manufacturing) experience rapid productivity growth, service sectors (e.g., care, performances) struggle to improve productivity, yet wages must keep pace to retain talent—resulting in persistently rising unit costs in the latter, making them appear increasingly expensive.

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Source support: Explicit

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    zh.wikipedia.orghttps://zh.wikipedia.org/wiki/%E9%AE%91%E8%8E%AB%E7%88%BE%E7%8F%BE%E8%B1%A1ZH · Explicit
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