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van Heuvelen, Gerrit Hugo
Bettendorf, Leon
Meijerink, Gerdien
Year of Publication: 
Series/Report no.: 
EconPol Working Paper No. 44
We follow the production function approach to assess markups, which requires the estimation of the output elasticity of a free input. In the basic setup we estimate a structural value added production function, using temporary contract hours as free input. We find rather stable markups in the Netherlands in the period 2006-2016. We show that extending the free variable incorrectly with fixed contract hours results in an increasing markup. Findings are robust to an alternative setup, in which a gross output function is specified and materials are used as free input. Implications for applied work and policy are discussed.
free variable
flexible contract labour
Document Type: 
Working Paper

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