Markups in a dual labour market: The case of the Netherlands |
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| Institution: | 1. Universität Potsdam, Am Neuen Palais 10, 14469 Potsdam, Germany;2. WZB, Reichpietschufer 50, Berlin 10785, Germany;3. Humboldt-Universität zu Berlin, Unter den Linden 6, 10099 Berlin, Germany;4. DIW Berlin, Mohrenstr. 58, 10117 Berlin, Germany;1. School of Economics, University of Queensland, St Lucia QLD 4069, Australia;2. Department of Economics, Tulane University, New Orleans, USA;1. Smith School of Business of Queen''s University;2. Economics Department at the University of Oklahoma;1. Toulouse School of Economics, France;2. Hanken School of Economics and Helsinki Graduate School of Economics, Finland;1. Loughborough University, Epinal Way, Loughborough LE11 3TU, United Kingdom;2. School of Economics and Centre for Competition Policy, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, United Kingdom;3. Centre for Competition Policy, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, United Kingdom;1. Economic Advisory, Deloitte France;2. DIW Berlin, Germany |
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| 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. |
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