Study: Average Markups Have Risen 49 Percent Since 1950

Chris Gaetano
Published Date:
Aug 30, 2017

A recent study conducted by the National Bureau of Economic Research has found that the average markup, across all sectors of the economy, has grown from 18 percent in 1950 to 67 percent today. While markups were relatively stable, and even decreasing in some areas, for about 30 years, the paper said that they began to increase around 1980. The paper noted, though, that this increase can be attributed to sharp increases in high-markup firms. This increase, in turn, drives the behavior of smaller firms, which were found to have a tendency towards higher markups. 

The NBER paper attributes this change to the shifting of power between employees and employers, with the latter having gained more power over the former over the decades. Specifically, the paper noted the following possible causes for this increase in average markup: 1. decrease in labor share, 2. increase in capital share, 3. decrease in low skill wages, 4. decrease in labor force participation, 5. decrease in labor flows, 6. decrease in migration rates, 7. slowdown in aggregate output.

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