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Markups in a dual labour market: The case of the Netherlands

Gerrit Hugo van Heuvelen, Leon Bettendorf and Gerdien Meijerink

International Journal of Industrial Organization, 2021, vol. 77, issue C

Abstract: We follow the production function approach to assess markups, which requires the estimation of the output elasticity of a flexible input. In the basic setup we estimate a structural value added production function, using temporary contract hours as flexible input. We find rather stable markups in the Netherlands in the period 2006–2016. We show that extending the flexible input incorrectly with fixed contract hours results in an increasing markup. Findings are robust to an alternative setup, in which a gross output production function is specified and materials are used as flexible input. Implications for applied work and policy are discussed.

Keywords: Markups; Flexible input; Flexible contract labour (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.ijindorg.2021.102762

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