BAUMOL:UNBALANCED GROWTH 421 dents.But,because a college degree seems increasingly to be a necessary condition for employr families have ent in a variety of attractive occupations,most apparen tuted in ly been prepared to pay the ever larger fees insti- nt years.As a result higher education has been absorbing a nstantly increasing proportion of per capita income.And the rela- vely constant productivity of college teaching leads our model to pr dict that rising educational costs are no temporary phenom they are not a resultant of wartime inflation nish onc faculty salaries are restored to their t r ar levels. that,as productivity in the remainder Rather,it suggests omy continues to in- crease octe of f the ec that ational organizations will mount corre. tever the magnitude of the funds they need e can be reasonably certain that they will require more tomor- row,and even more on the day after that. But not all services in the relatively constant productivity sector of the economy face inelastic demands.Many of the dispensable than retailing and education as ar onsumers are concerned.As their costs in decrease and they their utilization tends therefore to treat int limited ma ket the category of luxury goods with very or are prod disappear almost completely.Fine pottery and glass. the care ul labor of skilled craftsmen sell at astronom. prices,thoug I am told the firms that produce them earn relatively little profit from these product lines which they turn out primarily fo prestige and publicity,obtaining the bulk of their the mass production activities.Fine restau nd theat are fo ed to keep raising their prices,and at least in the case of the te we know that volume is dwindlir while it pliers(the produ becomes ever more difficult for sup- ers to make ends s meet An extre examp f an activity that has virtually disappeared is the construction (and,indeed,the utilization)of the large and stately ses whose operation even more than their construction allows for little in the way of enhanced productivity,and whose rising operation have apparently dec reased their salability even to the wealthy. economy in the fut 38e ething about the likely shape of our ur Our n to continu decl del tells us that manufactures are likely of den in relative cost and,unless the income elasticity d for manufactured goods is very large,they may absorb an ever smaller proportion of the labor force,which,if it transpires,may make it more difficult for our economy to maintain its overall rate of output growth. The analysis also suggests that real cost in the"n tors of the economy may be expected to go on increasing.S essive" se ne of the Copyright2001 All Rights Reserved