Baumol effect

The Baumol effect is the tendency for wages in low-productivity jobs to rise in response to wage gains in high-productivity sectors, making services such as health, education and the arts more expensive over time. William J. Baumol and William G. Bowen first described it in the 1960s, and Baumol later wrote that the rising costs of stagnant sectors "disproportionally affects the poor." In a 2008 study, William Nordhaus found that in the United States from 1948 to 2001, industries with lower productivity growth showed percentage-point for percentage-point higher growth in relative prices.