Measuring the real investment of resources in the transaction sector.

Abstract

Wallis and North (1986) construct a measurement of the transaction costs and name it transaction sector. They warn that the growth of its size may result from different reasons and not necessarily be due to newly invested resources. In this paper I distinguish four types of growth and develop a methodology which can catch a real investment in the transaction sector. It relies on occupational classifications. An empirical application is done for the USA from 1999 to 2008 and shows that, in general, new resources were added to the transaction sector steadily. This, however, is concomitant with a real growth of GDP; therefore one can conclude that the productivity of the transaction sector has not changed.