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Markups and the Manufacturing Productivity Slowdown

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  • Benjamin Bridgman

Abstract

This paper examines whether mismeasurement due to markups is responsible for the decline in US manufacturing productivity growth. It estimates markups using a model to estimate the user cost of capital to split capital payments into regular returns and economic profit. I do not find that the slowdown is due to mismeasurement. Correcting for markups tends to strengthen the slowdown. Labor input growth has been faster than output growth. The markup correction increases the impact of labor changes. The results are consistent with the slowdown resulting from slower technical change in investment products.

Suggested Citation

  • Benjamin Bridgman, 2026. "Markups and the Manufacturing Productivity Slowdown," AEA Papers and Proceedings, American Economic Association, vol. 116, pages 457-461, May.
    • Handle: RePEc:aea:apandp:v:116:y:2026:p:457-461
    DOI: 10.1257/pandp.20261043
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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