I am open for correction here, but I believe it works like so:
Consider this argument from The New Geography of Jobs. Productivity is higher where jobs are of the smarter type. However in those places blue collar jobs are higher paid and in demand too. The high productivity job-holders have more income to dispose on a variety of service sectors. But if there is not enough saturation of the labor market there will not be the quantity and quality of service sector jobs will be lower and the cost will be higher. If the service sector labor market is significantly constricted, the productive, smart jobs will be less productive too.
I am open for correction here, but I believe it works like so:
Consider this argument from The New Geography of Jobs. Productivity is higher where jobs are of the smarter type. However in those places blue collar jobs are higher paid and in demand too. The high productivity job-holders have more income to dispose on a variety of service sectors. But if there is not enough saturation of the labor market there will not be the quantity and quality of service sector jobs will be lower and the cost will be higher. If the service sector labor market is significantly constricted, the productive, smart jobs will be less productive too.