Study On Cost Disease Of Chinese Service Industry-based On An Expansion Model Of Boumal's Unbalanced Growth

The status of service industry in economy is rising in today's global economy,which reflects in the improvement of the proportion of output and employment.In China,the proportion of service output increased from 24.54%in 1978 to 48.11%in 2014 and the share of employment rose from 12.18%in 1978 to 40.60%in 2014.The service sectors has absorbed rural labor force and played an important role in improving national standard of living.Compared with developed countries,however,the level of China's service sectors is still relatively backward and the industrial structure is not very coordinated,which is mainly manifested as follows:1.The proportion of output of service sectors is low,most of developed countries,figures are more than 60%,such as Japan which was about 72.58%in 2013,The United States was 78.05%,the United Kingdom was 79.21%,Germany was about 68.43%and so on.2.The service sectors labor productivity is lower than the manufacturing.3.There is imbalance between supply and demand within the service sectors,that is,service sectors is short for high-tech talent labor.Therefore,it is of practical significance to study the evolution trend of China's service sectors and their internal structure,and to analyze the problems in the development of service sectors from both qualitative and quantitative aspects.Based on the characteristics of the service sectors to meet the intermediate demand or the final demand,this paper further divides the service sectors into the producer services and customer services.Then,this paper,taking the heterogeneity of this two types of services into account,and analysing the Baumol's model of unbalanced growth in which economy was divided into two sectors as "stagnant" and"progressive",introduces a model of third set of economic activities.Through this new model,this paper explains the relationship among labor proportion,price elasticity,income elasticity,along with other factors of producer service and customer service respectively.In addition,this paper uses data during 1990 to 2013 of China's service sectors and manufacturing to testify the extended model.The results show that the cost disease of the whole service sectors is mainly caused by customer services.The raising in the proportion of customer service employment of China is at a expense of labor productivity growth.What's more,both the price elasticity of demand and income elasticity of demand of customer service are low,which leads to an increase in consumer spending on customer services,and contributes to cost disease problem.The producer services do not fit the Baumol's model and their growth will ensure a sustainable growth of the overall economic productivity.Therefore,the service sectors planning should put more emphasis on the service sectors structure and its heterogeneity influence on overall economy.