Testing the Production Approach to Markup Estimation
By Devesh Raval. Social Science Research Network, 2020
96 citations recorded by the source corpus.
Under the production approach to markup estimation, any exible input should recover the markup. I test this implication using manufacturing datasets from Chile, Colombia, India, Indonesia, the US, and Southern Europe, as well as store-level data from a major US retailer, and overwhelmingly reject that markups estimated using labor and materials have the same distribution. For every dataset, markups estimated using labor are negatively correlated with markups estimated using materials, exhibit greater dispersion, and have opposite time trends. I continue to find stark differences in markups estimated using energy and non-energy raw materials. Non-neutral pro-ductivity differences across firms can explain these findings.
Subfields: Economics and Econometrics, Marketing
View Paper: https://www.semanticscholar.org/paper/312f16b3d67f37818b5d57d6730c32fbf32c38d3
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In Economics and Econometrics
- Gene M. Grossman
- Ezra Oberfield
- Arnaud Costinot
- Pol Antràs
- Giovanni Peri
- Jonathan Vogel
- Esteban Rossi-Hansberg
- Richard E. Baldwin
In Marketing
Citations in the corpus
- The Elusive Explanation for the Declining Labor Share (2021, background): “Raval (2020) and Doraszelski and Jaumandreu (2019) show, in di¤erent contexts, that the markups that are computed when using labor as the exible input behave very di¤erently from those derived using material inputs as the exible input.”