Changing institutions in the European market: the impact on mark-ups and rents allocation

Antonio Bassanetti (), Roberto Torrini and Francesco Zollino ()
Additional contact information
Antonio Bassanetti: Bank of Italy
Francesco Zollino: Bank of Italy

No 781, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We investigate whether the completion of the Single Market Programme has enhanced competition on the product markets across European countries, taking into account the companion structural reforms undertaken by the member countries, particularly in the labour market and the institutional setting of important industries (i.e. network industries). We test for a break in both mark-ups and the division of rent between capital and labour based on a statistical model incorporating efficient bargaining in the labour market. Using industry data for ten EU countries we find that, without controlling for changes in the rent sharing, mark-up estimates tend to increase in the 1990s. However, once we assume efficient bargaining in the labour market, mark-ups remain virtually unchanged or, in some sectors or groups of countries, even decrease; this reflects the declining shares of rents accruing to workers as a result of their diminished bargaining power. The evidence is particularly strong for high and medium-tech manufacturing, for construction and for those activities that went through deep institutional changes and privatization programmes.

Keywords: institutional changes; mark-up; rent-sharing (search for similar items in EconPapers)
JEL-codes: D40 J50 L50 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-eec and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.bancaditalia.it/pubblicazioni/temi-disc ... 0781/en_tema_781.pdf (application/pdf)

Related works:
Working Paper: Changing Institutions in the European Market: the Impact on Mark-ups and Rents Allocation
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_781_10

Access Statistics for this paper

More papers in Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC.
Bibliographic data for series maintained by ().