The Economics of Services Microfoundations, Development and Policy

Despite the fact that services have overtaken industry in terms of employment and GDP in developed countries, rigorous economic study of the service sector remains seriously neglected. The first edition of The Economics of Servicesinitiated a redress of this oversight. Fully revised and updated, the second edition of this highly acclaimed textbook should be required complimentary reading to mainstream microeconomics textbooks for graduate students of economics and for advanced courses in labor, urban and regional economics, economic geography and economic history. The text emphasizes the distinction between intermediate producer services and final consumer services. Many of the former are traded in global markets much like material goods in general, whilst the markets for consumer services are markedly local. This requires quite different micro-foundations in each case. Other key issues explored include the productivity development and quality of service measurements, as well as the key role of urbanization for service sector growth. The critical issues for the future of the real economy, beyond the financial crisis, are also analyzed in depth. The author illustrates how a better understanding of the nature of the service economy is necessary for policy innovation, with a view to regenerating the welfare state.