Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing

33 Pages Posted: 6 Aug 2004 Last revised: 20 Apr 2023

See all articles by Sabien Dobbelaere

Sabien Dobbelaere

Vrije Universiteit Amsterdam - Department of Economics; Tinbergen Institute; IZA Institute of Labor Economics

Abstract

This paper extends Hall's (1988) methodology to analyse imperfections in both the product and the labour market for firms in the Belgian manufacturing industry over the period 1988-1995. We investigate the heterogeneity in price-cost mark-up and workers' bargaining power parameters among 18 sectors within the manufacturing industry as well as the relationship between both parameters. Using a sample of more than 7 000 firms, our GMM results indicate that ignoring imperfection in the labour market leads to an underestimation in the price-cost margin evaluated at perfect competition in the labour market. These findings are confirmed in the sectoral analysis. Sectors with higher workers' bargaining power typically show higher price-cost margins.

Keywords: bargaining power, market power, price-cost margins, efficient bargaining

JEL Classification: C23, D21, J50, L13

Suggested Citation

Dobbelaere, Sabien, Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing. IZA Discussion Paper No. 1466, Available at SSRN: https://ssrn.com/abstract=572851 or http://dx.doi.org/10.2139/ssrn.572851

Sabien Dobbelaere (Contact Author)

Vrije Universiteit Amsterdam - Department of Economics ( email )

De Boelelaan 1105
NL- Amsterdam, NL-1081 HV
Netherlands
0031 20 598 28 74 (Phone)

Tinbergen Institute

Keizersgracht 482
NL- Amsterdam, NL-1017 EG
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
D- Bonn, 53072
Germany

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