Estimation of price-cost margins and union bargaining power for Belgian manufacturing

S. Dobbelaere

doi:10.1016/j.ijindorg.2004.10.003

Estimation of price-cost margins and union bargaining power for Belgian manufacturing

S. Dobbelaere

Economics

Research output: Contribution to Journal › Article › Academic

Abstract

This paper extends Hall's (1988) [Hall, R.E., 1988. The relationship between price and marginal cost in US industry, Journal of Political Economy, 96, 921-947] methodology to analyze imperfections in both the product and the labor 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 7000 firms, our GMM results indicate that ignoring imperfection in the labor market leads to an underestimation of the price-cost margin evaluated at perfect competition in the labor market. These findings are confirmed in the sectoral analysis. Sectors with higher workers' bargaining power typically show higher price-cost margins. © 2005 Elsevier B.V. All rights reserved.

Original language	English
Pages (from-to)	1381-1398
Journal	International Journal of Industrial Organization
Volume	22
Issue number	10
DOIs	https://doi.org/10.1016/j.ijindorg.2004.10.003
Publication status	Published - 2004

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title = "Estimation of price-cost margins and union bargaining power for Belgian manufacturing",

abstract = "This paper extends Hall's (1988) [Hall, R.E., 1988. The relationship between price and marginal cost in US industry, Journal of Political Economy, 96, 921-947] methodology to analyze imperfections in both the product and the labor 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 7000 firms, our GMM results indicate that ignoring imperfection in the labor market leads to an underestimation of the price-cost margin evaluated at perfect competition in the labor market. These findings are confirmed in the sectoral analysis. Sectors with higher workers' bargaining power typically show higher price-cost margins. {\textcopyright} 2005 Elsevier B.V. All rights reserved.",

author = "S. Dobbelaere",

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doi = "10.1016/j.ijindorg.2004.10.003",

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journal = "International Journal of Industrial Organization",

issn = "0167-7187",

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AU - Dobbelaere, S.

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AB - This paper extends Hall's (1988) [Hall, R.E., 1988. The relationship between price and marginal cost in US industry, Journal of Political Economy, 96, 921-947] methodology to analyze imperfections in both the product and the labor 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 7000 firms, our GMM results indicate that ignoring imperfection in the labor market leads to an underestimation of the price-cost margin evaluated at perfect competition in the labor market. These findings are confirmed in the sectoral analysis. Sectors with higher workers' bargaining power typically show higher price-cost margins. © 2005 Elsevier B.V. All rights reserved.

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DO - 10.1016/j.ijindorg.2004.10.003

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JO - International Journal of Industrial Organization

JF - International Journal of Industrial Organization

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