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What is the ‘cost disease’ identified by William Baumol and why is it important to understanding...

What is the ‘cost disease’ identified by William Baumol and why is it important to understanding cultural economics?

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Baumol cost disease tells us the effect of rise in salaries of those industries whose workers have experienced no productivity growth due to rise in salaries of those workers who have hike in productivity growth from any reason. If employees in Wholesale sector where salaries are low applies for a job for automobile sector where salaries are high, then it will raise the salary of wholesale employees. Thus this hike in salary is not due to productivity growth but due to salaries hike in other sector.

Cultural economics is the connection of people culture which is in the form of beliefs and preferences on economic outcomes and market behavior. It helps in identifying he reason for rising demand and supply of particular product. Example: Brown Coconut in India is used majorly for temple purposes, its increased sales can tells us the duration of festival season.

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