The Behavior of the Aggregate U.S. Wage Markdown

Hashmat Khan () and Konstantinos Metaxoglou ()
Additional contact information
Konstantinos Metaxoglou: Department of Economics, Carleton University, https://carleton.ca/economics/people/metaxoglou-konstantinos/

No 21-06, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: We estimate the aggregate U.S. wage markdown for 1987–2018 using the KLEMS data and the approach in Hershbein, Macaluso and Yeh (2020). Building on the existing literature, our markdown estimates depend on output elasticities of inputs and their shares of gross output. We identify four salient features of the markdown. First, the markdown is above 1, implying an average wage below the competitive level. Second, the markdown has increased over time, mainly during the 2000–2015 period. Third, the variation of the markdown is mostly driven by the input shares and not the output elasticities. Fourth, the markdown is strongly procyclical, implying a larger deviation of wages from their competitive levels during expansions.

Keywords: Employer Market Power; Monopsony; Markdowns; Business Cycles (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2021-07-06
New Economics Papers: this item is included in nep-com and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published: Carleton Economics Papers

Downloads: (external link)
https://carleton.ca/economics/wp-content/uploads/cewp21-06.pdf

Related works:
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:car:carecp:21-06

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Carleton Economic Papers from Carleton University, Department of Economics C870 Loeb Building, 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada.
Bibliographic data for series maintained by Court Lindsay ().