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The Baumol Effect may be at play. If over time the average worker has become twice as productive (farm combines, computers, factory robots) but construction wor
by ip26 3y ago
The Baumol Effect may be at play. If over time the average worker has become twice as productive (farm combines, computers, factory robots) but construction workers have only become one-and-a-half times as productive, then construction grows more expensive relative to other goods and services.
It's very counter-intuitive, but in essence labor is reallocated to its most productive applications, so if a certain type of labor does not get more productive while others do, labor is moved to other applications (unless you are willing to pay more for less)