Steady State Unemployment under Profit Sharing
AbstractThis paper demonstrates how asymmetric treatment of high-seniority "insider" workers and non-tenured "outsiders" gives rise to bad macroeconomic st eady states in a wage economy. The framework uses a Nash bargaining solution where workers may bargain over pay but firms control hiring. Profit sharing is then considered as an alternative payment mechanism having the automatically corrective incentive property that employers want to hire more outsiders. Given the assumptions of the model, it is shown that widespread profit sharing results in lower unemployment and more output even though it is individually rational for insiders to prefer wages over profit shares. Copyright 1987 by Royal Economic Society.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 97 (1987)
Issue (Month): 385 (March)
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- Koskela, Erkki & Stenbacka, Rune, 2012. "The relationship between product market competition and unemployment with profit sharing," Labour Economics, Elsevier, vol. 19(3), pages 291-297.
- Erkki Koskela & Rune Stenbacka, 2001. "Equilibrium Unemployment with Credit and Labour Market Imperfections," CESifo Working Paper Series 419, CESifo Group Munich.
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- Koskela, Erkki & Stenbacka, Rune, 2003. "Profit Sharing and Unemployment: An Approach with Bargaining and Efficiency Wage Economics," Discussion Papers 863, The Research Institute of the Finnish Economy.
- Erkki Koskela & Jan König, 2010. "Profit Sharing, Wage Formation and Flexible Outsourcing under Labor Market Imperfection," CESifo Working Paper Series 2925, CESifo Group Munich.
- Jan König & Erkki Koskela, 2011. "Does International Outsourcing Really Lower Workers’ Income?," Journal of Labor Research, Springer, vol. 32(1), pages 21-38, March.
- Erkki Koskela & Rune Stenbacka, 2000. "Compensation and Bargaining with Entrpreneurship as the Outside Option," CESifo Working Paper Series 314, CESifo Group Munich.
- Koskela, Erkki & König, Jan, 2011. "The Role of Profit Sharing in Dual Labour Markets with Flexible Outsourcing," IZA Discussion Papers 5798, Institute for the Study of Labor (IZA).
- Fehn, Rainer, 2002. "Arbeitsmarktflexibilisierung und Arbeitslosigkeit," Wirtschaftswissenschaftliche BeitrÃ¤ge 54, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.
- Tim Jenkinson & Sandeep Bhargava, 1996. "Partage explicite ou implicite du profit dans la détermination des salaires," Économie et Prévision, Programme National Persée, vol. 126(5), pages 19-29.
- Jellal, Mohamed, 2012.
"Dualisme Migration et Chômage au Maroc
[Morocco dualism migration and unemployment policies]," MPRA Paper 38365, University Library of Munich, Germany.
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