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Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing

  • S. DOBBELAERE

    ()

This paper extends Hall’s (1988) methodology to analyse imperfections in both the product and the labour market for firms in the Belgian manufacturing industry over the period 1988-1995. We investigate the heterogeneity in price-cost mark-up and union bargaining power parameters among 18 sectors within the manufacturing industry as well as the relationship between both parameters. Using a sample of more than 7 000 firms, our GMM results indicate that ignoring imperfection in the labour market leads to an underestimation in the price-cost margin evaluated at perfect competition in the labour market. These findings are confirmed in the sectoral analysis. Sectors with higher worker bargaining power typically show higher price-cost margins.

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Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 03/171.

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Length: 36 pages
Date of creation: Mar 2003
Date of revision:
Handle: RePEc:rug:rugwps:03/171
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