Do Higher Markups Lower Labor’s Share of Income?

Baris Kaymak and Immo Schott

Economic Commentary, 2024, vol. 2024, issue 02, 6

Abstract: Higher price markups are typically associated with larger profits at the expense of labor's share of income. In this Economic Commentary, we challenge this view. The key to our argument is the reallocation of market shares toward labor-intensive firms, a reallocation caused by an increase in the prices of capital goods as a result of higher markups.

Keywords: Price markups; Labor share of income (search for similar items in EconPapers)
Date: 2024
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DOI: 10.26509/frbc-ec-202402

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