Baumol's Cost Disease

The economic phenomenon where sectors unable to benefit from productivity gains (education, healthcare, live performance, personal services) must still raise wages to compete for labor with sectors that can, causing their relative costs to rise continuously. First described by economist William Baumol in the 1960s. In Taiwan’s context, explains why high-quality services remain underpriced relative to their actual labor input — creating systematic undervaluation of human-intensive work and pricing strategy challenges for service businesses. Connects to broader questions of value capture in knowledge work and the economics of attention-based services.