THE ASTONISHING REGULARITY OF SERVICE EMPLOYMENT EXPANSION

ABSTRACT An update of Victor Fuchs analysis shows an astonishing regularity of the relationship between per capita income and service industry employment. The two major theoretical hypotheses for the growth of the service sector, shifts in final demand towards services and the technological stagnancy of services, are then analyzed. Theories achieve simplicity and clarity from radical assumptions and it is therefore not surprising that empirically both dimensions are relevant. Shifts in final demand to services—especially of private consumption, however, gained importance over the last decades indicating a fundamental change of the division of labor: the marketization of household production, which is analyzed finally.