Journal Article

Do Higher Markups Lower Labor’s Share of Income?

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;

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Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Economic Commentary

Publication Date: 2024-02-05

Volume: 2024

Issue: 02

Pages: 6