UCL Department of Economics


Seminar in Applied Microeconomics presented by Jan de Loecker (KU Leuven)

21 February 2019, 12:15 pm–1:45 pm


'The Rise of Market Power and the Macroeconomic Implications' with Jan Eeckhout and Gabriel Unger

Event Information

Open to

UCL staff | UCL students




Department of Economics


Room 321
Drayton House
30 Gordon Street
United Kingdom

We document the evolution of markups based on firm-level data for the US economy since 1955. Initially, markups are stable, even slightly decreasing. In 1980,average markups start to rise from 21% above marginal cost to 61% now. The increase is driven mainly by the upper tail of the markup distribution: the upper percentiles have increased sharply, while the median is unchanged. In addition to fattening upper tail of the unweighted markup distribution, there is reallocation of market share from low to high markup firms. This rise occurs mostly within industry for all industries. We also find an increase in the average profit rate from 1% to 8%. While there is also an increase in overhead costs, the markup increase is in excess of overhead. We then discuss the macroeconomic implications of an increase in average market power, which can account for a number of secular trends in the last four decades, most notably the declining labor and capital shares as well as the decrease in labor market dynamism.


About the Speaker

Jan de Loecker

Research Professor at KU Leuven

Research Professor, Research Council (FWO) NBER Research Associate  -- CEPR Research Fellow

Research Interests: 

  • Industrial Organization
  • Empirical International Economics
  • Development Economics
  • Applied Microeconomics
More about Jan de Loecker