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Macroeconomic estimates of Italy�s mark-ups in the long-run, 1861-2012

Author

Listed:
  • Claire Giordano

    (Bank of Italy, Economic Outlook Division, Directorate General for Economics, Statistics and Research)

  • Francesco Zollino

    (Bank of Italy, Economic Outlook Division, Directorate General for Economics, Statistics and Research)

Abstract

We explore three alternative methodologies drawn from economic history literature to compute macroeconomic total-economy estimates of Italy�s mark-ups since 1861, based on the new historical national accounts presented in Baffigi (2013) and Giordano and Zollino (2015). Two key features of Italy�s history stand out: a) the increase in market power under the Fascist regime and b) the strengthening of competition since 1993. We then focus on a more limited time span (1970-2012) in order to estimate sectorial mark-ups using the model developed in Bassanetti, Torrini and Zollino (2010). Employing Istat and EU-KLEMs data, we find evidence of a reduction in mark-ups after the completion of the Single Market, with an acceleration after the inception of the European Monetary Union, owing mostly to the decrease in workers� bargaining power rather than in firms� margins. Moreover, we find large heterogeneity in mark-ups across sectors, with regulated services displaying weaker competition than manufacturing and market services.

Suggested Citation

  • Claire Giordano & Francesco Zollino, 2017. "Macroeconomic estimates of Italy�s mark-ups in the long-run, 1861-2012," Quaderni di storia economica (Economic History Working Papers) 39, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:workqs:qse_39
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    References listed on IDEAS

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    1. Rebekka Christopoulou & Philip Vermeulen, 2012. "Markups in the Euro area and the US over the period 1981–2004: a comparison of 50 sectors," Empirical Economics, Springer, vol. 42(1), pages 53-77, February.
    2. Norrbin, Stefan C, 1993. "The Relation between Price and Marginal Cost in U.S. Industry: A Contradiction," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1149-1164, December.
    3. Giordano, Claire & Giugliano, Ferdinando, 2015. "A tale of two Fascisms: Labour productivity growth and competition policy in Italy, 1911–1951," Explorations in Economic History, Elsevier, vol. 55(C), pages 25-38.
    4. Claire Giordano & Francesco Zollino, 2015. "A Historical Reconstruction of Capital and Labour in Italy, 1861-2013," Rivista di storia economica, Società editrice il Mulino, issue 2, pages 155-224.
    5. Filip Abraham & Jozef Konings & Stijn Vanormelingen, 2009. "The effect of globalization on union bargaining and price-cost margins of firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(1), pages 13-36, April.
    6. Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-330, April.
    7. Dobbelaere, Sabien, 2004. "Estimation of price-cost margins and union bargaining power for Belgian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 22(10), pages 1381-1398, December.
    8. Broadberry, Stephen & Giordano, Claire & Zollino, Francesco, 2011. "A Sectoral Analysis of Italy's Development: 1861 -2010," CAGE Online Working Paper Series 62, Competitive Advantage in the Global Economy (CAGE).
    9. Crafts,Nicholas & Toniolo,Gianni (ed.), 1996. "Economic Growth in Europe since 1945," Cambridge Books, Cambridge University Press, number 9780521499644, August.
    10. Giordano, Claire & Piga, Gustavo & Trovato, Giovanni, 2014. "Italy'S Industrial Great Depression: Fascist Price And Wage Policies," Macroeconomic Dynamics, Cambridge University Press, vol. 18(3), pages 689-720, April.
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    Cited by:

    1. Elisa Gamberoni & Claire Giordano & Paloma Lopez-Garcia, 2016. "Capital and labour (mis)allocation in the euro area: Some stylized facts and determinants," Questioni di Economia e Finanza (Occasional Papers) 349, Bank of Italy, Economic Research and International Relations Area.
    2. Roberto Torrini, 2015. "Labour, Profit and Housing Rent Shares in Italian GDP: Long-Run Trends and Recent Patterns," Politica economica, Società editrice il Mulino, issue 3, pages 275-314.
    3. Fenoaltea, Stefano, 2017. "The Growth of the Italian Economy, 1861-1913: Revised Second-Generation Production-Side Estimates," MPRA Paper 83508, University Library of Munich, Germany.
    4. Claire Giordano & Francesco Zollino, 2015. "A Historical Reconstruction of Capital and Labour in Italy, 1861-2013," Rivista di storia economica, Società editrice il Mulino, issue 2, pages 155-224.
    5. Alessandro Mistretta & Francesco Zollino, 2021. "Recent Trends in Economic Activity and TFP in Italy with a Focus on Embodied Technical Progress," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 7(1), pages 79-107, March.
    6. Ana Cristina Soares, 2020. "Price-cost margin and bargaining power in the European Union," Empirical Economics, Springer, vol. 59(5), pages 2093-2123, November.

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    More about this item

    Keywords

    mark-ups; completion policy; wage bargaining; growth accounting;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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