iarjbmIARJBMIARJBM2708-5147https://doi.org/10.47310/iarjbm.2021.v02i02.005Population Quality, Skill Premium and Service Industry GrowthWenZongYueyouZhangQichangDongSchool of Business Administration, Nanjing University of Finance and Economics, Nanjing 210046, ChinaYangtze Industrial Economic Institute, Nanjing University, Nanjing 210093, ChinaA Branch of China, Construction Bank in the New District of Shanghai Pilot Free Trade Zone, Shanghai 201306, ChinaThis study investigated the effect of population quality on service industry growth from a micro perspective. The results show that China’s service industry reaches the turning point at which its accelerated growth begins in 2011 and along with technological progress and increase in per-capita income, high population quality is playing an increasingly important role in this accelerated growth. Furthermore, population quality affects service industry growth through at least four channels: (1) the comparative advantage effect (personal consumption turns to the types of services in which the high-quality population has a comparative productivity advantage, therefore progressively more services are no longer self-provided, but are rather produced by the high-quality population in the market); (2) the opportunity cost effect (for the production of any specific service, the high-quality population is confronted with higher opportunity costs, so they choose to purchase external services instead; with the increase in skill premium and proportion of high-quality population, there is a rise in the proportion of service consumption in the whole society); (3) the mental preference effect (the high-quality population has a higher preference for consumption and production of service products; the overall improvement in population quality pushes society to develop an increasing inclination for consumption and production of service products, thus raising the proportion of service consumption); (4) the relative price effect (the rise in relative wages of the high-quality population forces the relative prices of service and material products up, thus increasing the nominal proportion of the service industry measured in terms of present value). The findings of this study provide important theoretical evidence for determining China’s current stage of economic development. While the Chinese economy has reached the Lewis turning point, such findings provide policy suggestions for the high-quality development of the Chinese economy and transformation of China from a service industry giant into a service industry power.