This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: The Service Economy Volume Author/Editor: Victor R. Fuchs, assisted by Irving F. Leveson Volume Publisher: NBER Volume ISBN: 0-87014-475-8 Volume URL: http://www.nber.org/books/fuch68-1 Publication Date: 1968 Chapter Title: Front matter, The Service Economy Chapter Author: Victor R. Fuchs Chapter URL: http://www.nber.org/chapters/c1154 Chapter pages in book: (p. -32 - 0) The Service Economy NATIONAL BUREAU OF ECONOMIC RESEARCH NUMBER 87,GENERALSERIES The Service Economy VICTOR R. FUCHS The City University of New York Assisted by irving F. Leveson NATIONAL BUREAU OF ECONOMIC RESEARCH NEW YORK 1968 Distributed by COLUMBIA UNIVERSITY PRESS NEWYORK AND LONDON Copyright ©1968by National Bureau of Economic Research All Rights Reserved L.C. Card No. 68-8802 Printed in the United States of America SBN: 87014-475-8 NATIONAL BUREAU OF ECONOMIC RESEARCH OFFICERS Arthur F. Burns, Honorary Chairman Geoffrey H. Moore, Vice President-Research Theodore 0. Yntema, Chairman Victor R. Fuchs, Vice President-Research Walter W. Heller, Vice Chairman Douglas H. Eldridge, Vice President- John R. Meyer, President Administration Donald B. Woodward, Treasurer Hal B. Lary, Director of international Studies DIRECTORS AT LARGE Joseph A. Befrne, Communications Workers Gabriel Hauge, Manufacturers Hanover Trust of America Company Wallace J. Campbell, Foundation for Walter W. Heller, University of Minnesota Cooperative Housing Vivian W. Henderson, Clark College Erwin D. Canhani, Christian Science Monitor Albert J. Hettinger, Jr., Lazard Frères and Robert A. Charpie, Bell & Howell Company Company Solomon Fabricant, New York University John R. Meyer, Yale University Frank W. Fetter, Hanover, New Hampshire J. Irwin Miller, Cummins Engine Corp. Eugene P. Foley, International Ore and Geoffrey H. Moore, NBER Fertilizer Corporation J. Wilson Newman, Dun & Bradstreet, Inc. Marion B. Folsom, Eastman Kodak Company George B. Roberts, Larchmont, New York Eli Goldston, Eastern Gas and Fuel Assoc. Robert V. Roosa, Brown Brothers Harriman Crawford H. Greenewalt, E. I. du Pont & Co. de Nemours & Company Boris Shishkin, AFL-CIO Gus Tyler, ILGWU Donald B. Woodward, A. W. Jones and Company Theodore 0. Yntenia, Oakland University DIRECTORS BY UNIVERSITY APPOINTMENT Moses Abramovitz, Stanford Douglas G. Hartle, Toronto Francis M. Boddy, Minnesota Robert J. Lampman, Wisconsin Arthur F. Burns, Columbia Maurice W. Lee, North Carolina Lester V. Chandler, Princeton Lloyd G. Reynolds, Yale Melvin G. de Chazeau, Cornell Robert M. Solow, Massachusetts Institute of Otto Eckstein, Harvard Technology Walter D. Fisher, Northwestern Henri Theil, Chicago R. A. Gordon, California Willis J. Winn, Pennsylvania DIRECTORS BY APPOINTMENT OF OTHER ORGANIZATIONS Emilio G. Collado, Committee for Economic Douglass C. North, Economic History Development Association Thomas D. Flynn, American Institute of Murray Shields, American Management Certified Public Accountants Association Nathaniel Goldfinger, American Federation George Clime Smith, National Association of of Labor and Congress of Industrial Business Economists Organizations Willard L. Thorp, American Economic Harold G. Haicrow, American Agricultural• Association Economics Association W. Allen Wallis, American Statistical Walter E. Hoadley, American Finance Association Association DIRECTORS EMERITI Percival F. Brundage Harry W. Laidler HarryScherman JacobViner Harold M. Groves ShepardMorgan George Soule JosephH.Willits Gottfried Haberler SENIOR RESEARCH STAFF Moses Abramovitz Solomon Fabricant C. Harry Kahn Geoffrey H. Moore Gary S. Becker Milton Friedman John W. Kendrick Nancy Ruggles Arthur F. Burns Victor R. Fuchs Irving B. Kravis Richard Ruggles Philip Cagan Raymond W. Goldsmith Hal B. Lary Robert P. Shay Alfred H. Conrad Jack M. Guttentag Robert E. Lipsey George J. Stigler James S. Earley Daniel M. Holland Jacob Mincer Victor Zarnowitz F. Thomas Juster Ilse Mintz RELATION OF THE DIRECTORS TO THE WORK AND PUBLICATIONS OF THE NATIONAL BUREAU OF ECONOMIC RESEARCH 1. The object of the National Bureau of Economic Research is to ascertain and to present to the public important economic facts and their interpretation in a scientific and impartial manner. The Board of Directors is charged with the re- sponsibility of ensuring that the work of the National Bureau is carried on in strict conformity with this object. 2. The President of the National Bureau shall submit to the Board of Directors, or to its Executive Committee, for their formal adoption all specific proposals for research to be instituted. 3. 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No manuscript may be published, though approved by each member of the special manuscript committee, until forty-five days have elapsed from the trans- mittal of the report in manuscript form. The interval is allowed for the receipt of any memorandum of dissent or reservation, together with a brief statement of his reasons, that any member may wish to express; and such memorandum of dissent or reservation shall be published with the manuscript if he so desires. Publication does not, however, imply that each member of the Board has read the manuscript, or that either members of the Board in general or the special committee have passed on its validity in every detail. 6. Publications of the National Bureau issued for informational purposes con- cerning the work of the Bureau and its staff, or issued to inform the public of activities of Bureau staff, and volumes issued as a result of various conferences involving the National Bureau shall contain a specific disclaimer noting that such publication has not passed through the normal review procedures required in this resolution. The Executive Committee of the Board is charged with review of all such publications from time to time to ensure that they do not take on the char- acter of formal research reports of the National Bureau, requiring formal Board approval. 7. Unless otherwise determined by the Board or exempted by the terms of paragraph 6, a copy of this resolution shall be printed in each National Bureau publication. (Resolution adopted October 25, 1926 and revised February 6, 1933, February 24, 1941, and April 20, 1968) To Nancy, Fred, Paula, and Kenneth CONTENTS Preface xxiii 1. Summary of Findings 1 Service Employment 2 Reasons for Growth of Services 3 Productivity, Growth, and Wages 5 SectorDifferences in Hourly Earnings 6 Sector Differences in Cyclical Fluctuations 8 Implications for Industrial Organization and Labor 9 Implications for Economic Analysis 12 Suggestions for Further Research 13 2. The Growing Importance of Service Employment 14 Sector Definitions 14 Sector Trends in U.S. Employment 17 Detailed Industries 22 Long-Term Trends 22 Sector Trends by State and in Foreign Countries 24 Occupational Trends 31 Trends in Output 35 Some Evidence on Intermediate Demand 39 Some Evidence on Income Elasticity 41 3. Productivity Trends by Sector and Major Industry Group 46 Measures of Input and Output 46 Ouptut 46 Employment 47 Total Labor Input 48 Total Factor Input 49 x Contents Trends in Productivity 50 Sector Comparisons of Productivity Change 50 Productivity by Major Industry Group 54 Correlations Between Time Periods and Between Different Measures of Productivity 56 Quality of Labor 60 Additional Evidence on Labor Quality 66 Physical Capital and the "Residual" 71 Physical Capital Per Worker 71 Possible Biases in Measurement of Residual 73 Reexamination of the Shift to Service Employment 75 4. Productivity Differences Within the Service Sector: A Statistical Analysis 77 Scope, Definitions, and Sources 78 Real Output 78 Employment 80 Labor Input 82 Output Per Man and Per Unit of Labor Input 82 Output Per Unit of Total Input 82 Annual Percentage Rates