Markups and the Manufacturing Productivity Slowdown

Benjamin Bridgman

AEA Papers and Proceedings, 2026, vol. 116, 457-461

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.

JEL-codes: D24 G31 L25 L60 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/pandp.20261043

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