Combining financial statements with firm-level product prices, we find that larger firms exhibit lower markups, although they are overcompensated by substantially higher wage markdowns. We explain our divergence from prior results by highlighting how labor market power affects markup estimates.

---

10 July 2025

---

Economics Letters 2552025

---

DOI: 10.1016/j.econlet.2025.112500

https://www.sciencedirect.com/science/article/pii/S0165176525003374

This Journal article is published under the centre's Growth programme.