Academic journal article Nordic Journal of Working Life Studies

Work and Labor in Slow-Progressive Sectors of the Economy

Academic journal article Nordic Journal of Working Life Studies

Work and Labor in Slow-Progressive Sectors of the Economy

Article excerpt

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Baumol and Bowen (1965/1997, 1966) pointed out in their classic inquiries into the economic difficulties characteristic of performing arts1 that the conditions of work in the performing arts differ from the conditions of work in other economic activities. For a majority of performing artists, though certainly not for all,2 leading a life of a performing artist meant constant struggle for earning a living. However hard they tried, and however low they kept the costs of their own company, it appeared that they were fighting a losing battle. In terms of the current paper, they were under the twin pressures characteristic of the slow-progressive sectors of the economy: downward pressure on the rate of growth of wages and upward pressure on the rate of growth of productivity.

Baumol and Bowen (1965/1997, 1966) were equally careful in pointing out that this had some very specific effects on labor in the slow-progressive sectors of the economy, i.e., on the workers who opted for a career in the performing arts and decided to stay in the field. They enjoyed music, for instance, and got deep psychic income from their chosen art. In terms of modern theories of motivation, they appreciated the intrinsic motivational aspects of their occupation, rather than the extrinsic incentives involved with it (Deci and Ryan, 1985; Ryan and Deci, 2000).

There are two parts to this paper. In the first part, we present a simple model which reconstructs and renews the argument by Baumol and Bowen. The theoretical discussion in this paper focuses on the effects of cost disease on unit wages, productivity pressure, and the structure of incentives in slow-progressive economic activities. Earlier research has focused on other kinds of implications of the cost disease phenomenon. The emphasis has been on the contraction of the overall rate of growth of the economy in the long run, the problems concerned with the overall tax rate of the economy, and the associated problems of sustainable social spending. In view of different industries, earlier analyses cover at least performing arts, health care, education, mass media, computing technology (hardware, software), and law enforcement and military (see Baumol, 1967, 1993a, 1993b, 1996, 2012; Baumol and Baumol, 1984/1997; Baumol and Bowen, 1965/1997, 1966; Baumol and Oates, 1972/1997; Baumol et al., 1985; Besharov, 2005; Cowen, 1996; Fordham, 2003; Lindbeck, 2006; Nordhaus, 2002, 2006; Oulton, 2001; Peacock, 1996; Preston and Sparviero, 2009; Scitovsky and Scitovsky, 1959; Sparviero and Preston, 2010; Triplett and Bosworth, 2003; van der Ploeg, 2006; van Reenen, 1999).

In the second part of the paper, we take a brief, early look at the empirical evidence. We analyze the effects of cost disease on the nature of work and working conditions in the slow-progressive economic activities. First, we briefly revisit the literature on inter-industry wage differentials. Then, in a bit more detailed analysis, we consider the predicted effects of cost disease on productivity pressure and on intrinsic vs. extrinsic incentives. We ask and aspire to answer the following:

1. What happens to employees' experience of time pressure in an economy which experiences a massive shift of employment from agriculture and manufacturing industries to labor-intensive services, with opportunities for labor-augmenting technological improvements tapering off?

2. If time pressure, as a manifestation of productivity pressure, shoots up as expected, and if wages in the slow-progressive sectors are lagging behind other sectors, why is it that the supply of labor does not collapse in the slow-progressive sectors?

3. Does the actual, observed structure of incentives correspond to the expected structure of incentives, in the sense that intrinsic incentives are accentuated in the occupations of the slow-progressive sectors, compared with the occupations of the fast-progressive sectors? …

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