Sectoral mark-ups in U.S. Manufacturing.

Highlights • The aggregate mark-up on average costs moved pro-cyclically, especially in the period 1958–1980. • A high degree of common reaction to business cycles was found among the twenty industries in consideration. • Groups of industries with different market structures presented strong similarity in their overall mark-up behavior. • The pattern of technical change in the sample is characterized by capital-using/labor-saving bias. Abstract This study investigates the mark-up on average costs in the U.S. manufacturing industry at the aggregate and two-digit industry levels. We first analyze the behavior of profit margins over seven business cycles between 1958 and 1996 and establish some stylized facts for the cyclical dynamics of mark-ups. Second, we look at the secular movements in margins of profits through a simple trend decomposition of the aggregate and two-digit mark-ups. We find that: (1) the aggregate and the majority of two-digit mark-ups behave pro-cyclically; and (2) the trend in margins of profits in the period is explained by a marked rise in the rate of surplus value and a fall in the composition of capital, indicating labor-saving/capital- using technical change. [ABSTRACT FROM AUTHOR]