This is a very personal take, but one of the things I have always attributed to the Baumol effect is the following.
My partner works in the (semi) healthcare. She loves it but her main stress factor (nemesis even) has been lousy management. And she has a point. The managers in her organization are people who would be fired after a few weeks in my organization. I work in IT and we pay our managers serious money. I am the last one to say they are perfect or more than marginally competent, but they get the job done.
What my partner ends up with are the managers that cannot get a job in the better paying segment. And that is very much to the detriment of our healthcare.
The Baumol effect is not as much about, say, musicians who decide against their calling to become engineer instead, but about the job roles that can switch markets easily. Among those, the real talent follows the money. And to be honest, I cannot blame them. It is just human nature. But that does not make it less of a problem.
> What my partner ends up with are the managers that cannot get a job in the better paying segment.
This observation is sort of downstream from the Baumol effect rather than the effect itself or more accurately when the effect is countered explicitly.
The core loop of the effect is when you need to pay a healthcare manager a ballpark similar salary when putting out a "for hire" ad to get applicants or alternatively hide the salary filter till much later in the interview sunk cost.
The problem is that you end up having the managers first apply for other jobs before getting to the low-paying job, so the initiators of the interaction (i.e "apply for jobs") sieve out before getting to the job that pays almost the same but needs less competence.
So you pay about as much, but get even less value for money than paying more.
When you put Baumol effect, Dutch Disease[1], Gale & Shapley[2] and the Market for Lemons[3] together, you get to see the job market from a lot of different angles in my immediate neighbourhood.
Silicon valley has a Dutch disease for math teachers for instance, but also the Baumol effect for the English staff. Not complaining about them, I'd like my kids to learn history, math and english from great teachers & don't want to do Kumon or whatever else the other kids are doing after school.
The way the schools try to fix it is by making the schools initiate hiring through temps and do extensive adjunct periods before any concept of tenure to work around the market for lemons (you can't hire a temp managing director, which is what's different there).
This really sucks for the good teachers who want to have a happy late 20s in the career they prefer.
I think of a related effect every single time I'm at the DMV, or on the phone with a customer service representative, or dealing with insurance or some other job where few people love and I'm dealing with them clearly doing a shitty job.
I remember that people on the left side of the bell curve need jobs too. And, all else being equal, I'd probably prefer them manning the phones at a hotel and sometimes screwing up my reservation than wielding a scalpel when I'm under the knife.
I wonder if it's something else. I see constant complaints about the DMV on the Internet and popular culture. Dealing with Service NSW in Australia however has always been fast and painless for me.
My partner works in the (semi) healthcare. She loves it but her main stress factor (nemesis even) has been lousy management. And she has a point. The managers in her organization are people who would be fired after a few weeks in my organization. I work in IT and we pay our managers serious money. I am the last one to say they are perfect or more than marginally competent, but they get the job done.
What my partner ends up with are the managers that cannot get a job in the better paying segment. And that is very much to the detriment of our healthcare.
The Baumol effect is not as much about, say, musicians who decide against their calling to become engineer instead, but about the job roles that can switch markets easily. Among those, the real talent follows the money. And to be honest, I cannot blame them. It is just human nature. But that does not make it less of a problem.