Abstract
This paper investigates the existence of markups and their cyclical behaviour at the industry sector level. Markups are given as a price-cost relation that is estimated from a dynamic, structural model of the firm. The firms face costly adjustment of labour and potential financial constraints. The model is tested on a panel of firm- and plant-level data from Norwegian manufacturing industries. The results indicate a frequent presence of moderate pro-cyclical markups. Labour adjustment costs are present in four out of seven sectors but small in magnitude. The results are related to the role played by unions in a setting with high union density.
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Askildsen, J.E., Nilsen, Ø.A. Markup cyclicality and input factor adjustments. Empir Econ 38, 409–428 (2010). https://doi.org/10.1007/s00181-009-0273-y
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DOI: https://doi.org/10.1007/s00181-009-0273-y