TY  - JOUR
AU  - De Loecker, Jan
AU  - Eeckhout, Jan
TI  - The Rise of Market Power and the Macroeconomic Implications
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 23687
PY  - 2017
Y2  - August 2017
DO  - 10.3386/w23687
UR  - http://www.nber.org/papers/w23687
L1  - http://www.nber.org/papers/w23687.pdf
N1  - Author contact info:
Jan De Loecker
Economics Department
KU Leuven
Naamsestraat 68
3000 Leuven
Belgium
E-Mail: jan.deloecker@kuleuven.be

Jan Eeckhout
Department of Economics
Universitat Pompeu Fabra
Trias Fargas 25
Barcelona
08005
Spain
E-Mail: jan.eeckhout@upf.edu
AB  - We document the evolution of markups based on firm-level data for the US economy since 1950. Initially, markups are stable, even slightly decreasing. In 1980, average markups start to rise from 18% above marginal cost to 67% now. There is no strong pattern across industries, though markups tend to be higher, across all sectors of the economy, in smaller firms and most of the increase is due to an increase within industry. We do see a notable change in the distribution of markups with the increase exclusively due to a sharp increase in high markup firms. 
We then evaluate the macroeconomic implications of an increase in average market power, which can account for a number of secular trends in the last 3 decades: 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.
ER  -