Curing Baumol’s Disease: In Search of Productivity Gains in K–12 Schooling
Because labor-intensive services such as education must compete with other parts of the economy for workers yet cannot cut staffing without reducing output, costs rise constantly. This problem, labeled “Baumol’s cost disease,” is rampant in education, write Paul Hill and Marguerite Roza in a working paper for the Center on Reinventing Public Education. Other labor-intensive industries have, however, beaten back this disease, the authors write, and the same is possible in education. They recommend more and better use of information technology, deregulation, redefining the service offered, making the supply chain more efficient, production innovations, and redesigning workforce policies.