Profit‐Sharing and Employment: Claims and Overclaims

Nuti, Domenico Mario

doi:10.1111/j.1468-232x.1987.tb00691.x

Cited by 29 publications

(7 citation statements)

References 9 publications

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“…Weitzman's theory is subject to numerous counterarguments (for instance, see Blanchflower and Oswald ; Nuti ; Wadhwani ). One of the most popular objections is that employees, who are risk averse, may refuse higher variability in their total compensation unless it is rewarded with higher compensation.…”

Section: A Brief Survey Of the Literature Addressing The Links Betweementioning

confidence: 99%

Profit‐Sharing and Wages: An Empirical Analysis Using French Data between 2000 and 2007

Delahaie

Duhautois

2018

Brit J Industrial Rel

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Economic theory presents different arguments about how profit-sharing may affect wages. First, profit-sharing may substitute for the base wage. Second, profit-sharing can be interpreted as an 'efficiency wage' that adds to the base wage and increases total compensation. The existing empirical literature has not determined which of these arguments is valid. This article attempts to address this issue for France between 2000 and 2007. Based on a difference-in-differences selection model, we show that bonuses in firms adopting profit-sharing are too small to conclude whether it substitutes for or complements the base wage. While base wage levels are generally higher among profit-sharing firms, changes in the base wage over this period are lower among firms that have had profit-sharing for a number of years.

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Section: A Brief Survey Of the Literature Addressing The Links Betweementioning

confidence: 99%

Profit‐Sharing and Wages: An Empirical Analysis Using French Data between 2000 and 2007

Delahaie

Duhautois

2018

Brit J Industrial Rel

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“…Skeptical about positive impact of profit-sharing and especially about rationality of governmental subsidies in favor of profit-sharing were e.g. Blanchflower and Oswald (1987), Nuti (1987), as well as Estrin, Grout, and Wadhwani (1987). The topic of policy support is central also for articles (Florkowski, 1991), (Kruse, 1994), (Mitchell, 1995) and is often discussed also in works dedicated to the analysis of utilization of profit-sharing in various countries (see chapter 6).…”

Section: Macroeconomic Aspects Of Profit-sharingmentioning

confidence: 99%

Profit-Sharing – A Tool for Improving Productivity, Profitability and Competitiveness of Firms?

Fibírová¹,

Petera²

2013

JOC

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The importance of appropriate utilization of rewards for performance is still growing and therefore this type of rewards can be seen as a significant part of a total rewards package. Companies that are able to appropriately implement rewards for performance may gain competitive advantage over their competitors, but successful implementation requires a good knowledge of these rewards. The main aim of this paper is to contribute to the growth of this knowledge by identifying possible positive and negative impacts of profit-sharing on various areas that are important for the performance of a company, nevertheless, addressed are also macroeconomic consequences of profit-sharing. Furthermore, a comprehensive and up-to-date review of the relevant literature is provided, under-researched areas are identified and suggestions for further research are given. To accomplish these goals, we applied methods of bibliometric analysis to the articles indexed in ISI Web of Knowledge to identify the most important articles, authors and topics. According to our findings, the majority of studies report a neutral or positive impact of profit-sharing on productivity and profitability. This impact may be achieved by direct influence of profit-sharing on productivity of employees (due to the dependence of their pay on profit), but it seems that yet more important are various mediating mechanisms, especially effects on employment stability, absenteeism, quits and related issues, as well as effects on attitudes of employees and on relationships between employees. We argue that a well-designed profit-sharing plan is crucial for its success, but it is a relatively under-researched problem.

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“…The literature on the employment effect of profit sharing abounds. For the review of this literature, see Nuti (1987) and Standing (1988). In this paper, we are abstracting from this controversial effect in order to focus on the determination of optimal sharing ratio under the share price maximization principle.…”

Section: Endnotesmentioning

confidence: 99%

“…Most of these discussions have focussed mainly on macro-economic implications in terms of employment, inflation and wage rates. For example, see Meade (1986), Mitchell (1987), Nuti (1987), Standing (1988), and Weitzman (1983, 1984, 198.5). The literature on profit sharing at the micro level has centered mainly on whether profit sharing produces "shirking" or, in contrast, a productivity or profitability effect.…”

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confidence: 99%

Optimal Sharing Ratio in a Profit‐sharing Arrangement

Rashid

Sharma

1991

Can J Adm Sci

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This paper derives an optimal sharing ratio for a capitalist or non‐participating firm in a model where workers get a fixed market‐determined wage plus a share of net profit. For the analysis, modern capital market theory and the stock value maximization principle are used. It is shown that the optimal sharing ratio depends on (i) the productivity effect of profit sharing, (ii) the corporate tax treatment of the sharing wage, and (Hi) the risk preferences of management! shareholders. A relationship between productivity effects from profit sharing and optimal sharing ratio is derived. Assuming normally distributed profits of the firm, the results of the paper are illustrated numerically. Resume Cet exposé présente la proportion de partage optimal pour une firme capitaliste ou non‐participante dans laquelle les employés recoivent un salaire déterminé par les forces du marché avec un pourcentage des profits‐net. On utilise pour l'analyse la théorie du marché capital moderne et le principe de maximalisation de la valeur des réserves. Il est démontré que la proportion de partage optimal dépend de: (i) l'effet que le partage des profits a sur la productivité, (ii) comment les taxes commerciales affectent les salaires portagés et (iii) les préférences de risque des gestionnaires\actionnaires. Un rapport est établi entre les effets sur la productivité du partage des profits et la proportion de partage optimal, partir d'une distribution normale des profits d'une firme, les résultats de cet exposé sont illustrés numériquement.

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Profit‐Sharing and Employment: Claims and Overclaims

Cited by 29 publications

References 9 publications

Profit‐Sharing and Wages: An Empirical Analysis Using French Data between 2000 and 2007

Profit‐Sharing and Wages: An Empirical Analysis Using French Data between 2000 and 2007

Profit-Sharing – A Tool for Improving Productivity, Profitability and Competitiveness of Firms?

Optimal Sharing Ratio in a Profit‐sharing Arrangement

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