February 18, 2020

Markups in a dual labour market: the case of the Netherlands

We follow the production function approach to assess markups, which requires the estimation of the output elasticity of a free input. In the basic setup we estimate a structural value added production function, using temporary contract hours as free input. We find rather stable markups in the Netherlands in the period 2006-2016. We show that extending the free variable incorrectly with fixed contract hours results in an increasing markup.

Findings are robust to an alternative setup, in which a gross output function is specified and materials are used as free input. Implications for applied work and policy are discussed.

Contacts

Foto Harro van Heuvelen
Harro van Heuvelen +31 6 27334271 Read more
Foto Leon Bettendorf
Leon Bettendorf +31 6 46350704 Read more
Foto Gerdien Meijerink
Gerdien Meijerink +31 6 21191090 Read more

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