Productivity, Price- and Wage-Markups: An Empirical Analysis of the Dutch Manufacturing Industry

35 Pages Posted: 15 Mar 2015

See all articles by Sara Amoroso

Sara Amoroso

European Commission, Joint Research Centre, Institute for Prospective Technological Studies (IPTS)

Bertrand Melenberg

Tilburg University - Center for Economic Research (CentER)

Joseph Plasmans

University of Antwerp - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Tilburg University

Mark Vancauteren

Hasselt University; Statistics Netherlands

Multiple version iconThere are 2 versions of this paper

Date Written: September 01, 2014

Abstract

This paper examines the interaction between productivity growth, firms’ monopolistic market power, and workers’ wage bargaining power. Our study contributes to several strands of literatures. First, we examine a monopolistic framework which accounts for wage bargaining.

In addition to the other studies, along with the parameters characterizing a production function and the price-cost margins, we derive a measure of wage markup without relying on trade union participation data, and we study the correlation of the estimated parameters and markups with the firm-level productivity growth.

Second, the paper contributes to literature on the structural identification of production functions in two ways. As a first step, it reviews the different estimation techniques that have been tackling the endogeneity issues concerning the simultaneity, the omitted output price, and the collinearity among input factors of production. Additionally, we propose an identification strategy that relies on the presence of imperfect competition in the flexible input market, namely, the labor market.

Keywords: price-cost margin, trade unions, identification, production functions, panel data

JEL Classification: L1, D22, D24, J51

Suggested Citation

Amoroso, Sara and Melenberg, Bertrand and Plasmans, Joseph E. J. and Vancauteren, Mark, Productivity, Price- and Wage-Markups: An Empirical Analysis of the Dutch Manufacturing Industry (September 01, 2014). Available at SSRN: https://ssrn.com/abstract=2577807 or http://dx.doi.org/10.2139/ssrn.2577807

Sara Amoroso (Contact Author)

European Commission, Joint Research Centre, Institute for Prospective Technological Studies (IPTS) ( email )

Edificio Expo, C
Inca Garcilaso, s/n
Sevilla, E-41092
Spain
+34 9544 88335 (Phone)

Bertrand Melenberg

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2730 (Phone)

Joseph E. J. Plasmans

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Tilburg University

Postbus 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Mark Vancauteren

Hasselt University ( email )

Agoralaan - building D
Gebouw D
Diepenbeek, 3590
Belgium

Statistics Netherlands ( email )

Henri Faasdreef 312
The Hague, 2492 JP
Netherlands

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