I think you meant Baumol’s cost disease: when productivity in manufacturing rises and new jobs there appear, potential service workers chase those more lucrative jobs, and all the salaries in the service sector increase.
It’s the same reason emigrants to the West from less-developed economies, where the effect is less prominent, are usually surprised by expensiveness of haircuts, extreme expensiveness of dental medicine and low quality of manicure. Dentists and nail masters now offer much better services than 50 or 100 years ago but they work just as slowly, and the hairdressers don’t even have the former benefit.
P. S.
In many Indian cities, as I’ve read, middle or upper-middle class still can afford servants as of now, but that’s likely to disappear soon
I think you meant Baumol’s cost disease: when productivity in manufacturing rises and new jobs there appear, potential service workers chase those more lucrative jobs, and all the salaries in the service sector increase.
It’s the same reason emigrants to the West from less-developed economies, where the effect is less prominent, are usually surprised by expensiveness of haircuts, extreme expensiveness of dental medicine and low quality of manicure. Dentists and nail masters now offer much better services than 50 or 100 years ago but they work just as slowly, and the hairdressers don’t even have the former benefit.
P. S.
In many Indian cities, as I’ve read, middle or upper-middle class still can afford servants as of now, but that’s likely to disappear soon