IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v83y2004i1p37-42.html
   My bibliography  Save this article

Incentives? The effect of profit sharing plans offered by previous employers on current wages

Author

Listed:
  • Parent, Daniel

Abstract

In this paper, I investigate the relationship between wages and the use of profit sharing plans by both current and past employers. Using data from the National Longitudinal Survey of Youth, I find that when I control for the number of years on profit sharing plans prior to the current job, the wage effect of those previous plans is both economically and statistically significant while the wage effect of current plans is markedly reduced, if not completely eliminated. This result sheds doubt on a simple incentive-for-effort explanation for the wage/productivity impact previously measured and suggests that an alternative mechanism based on skill acquisition is likely to play a role. Dans cette étude, j'examine le lien entre la rémunération versée aux travailleurs et l'utilisation de programmes de partage de profits («profit sharing») par l'employeur actuel ainsi que les employeurs précédents. Avec des données du National Longitudinal Survey of Youth, je trouve que l'effet des programmes de partage de profits dont ont bénéficié les travailleurs dans leurs emplois antérieurs à leur emploi actuel est économiquement et statistiquement significatif. De fait, tenir compte de ces programmes dans une équation de gains standard réduit de façon très substantielle ou même totalement l'effet de programmes similaires offerts par l'employeur actuel. Ce dernier résultat laisse planer un doute sérieux sur une explication standard (quoique problématique) donnée pour justifier l'existence de l'effet positif des programmes de partage de profits, à savoir un effet incitatif à l'effort. Les résultats sont davantage cohérents avec le fait que les travailleurs bénéficiant de tels programmes acquièrent des habiletés transférables d'un employeur à un autre.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)<
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Parent, Daniel, 2004. "Incentives? The effect of profit sharing plans offered by previous employers on current wages," Economics Letters, Elsevier, vol. 83(1), pages 37-42, April.
    • Handle: RePEc:eee:ecolet:v:83:y:2004:i:1:p:37-42
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165-1765(03)00323-9
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Felix R. FitzRoy & Kornelius Kraft, 1987. "Cooperation, Productivity, and Profit Sharing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(1), pages 23-35.
    2. Joseph G. Altonji & Robert A. Shakotko, 1987. "Do Wages Rise with Job Seniority?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(3), pages 437-459.
    3. Jones, Derek C & Kato, Takao, 1995. "The Productivity Effects of Employee Stock-Ownership Plans and Bonuses: Evidence from Japanese Panel Data," American Economic Review, American Economic Association, vol. 85(3), pages 391-414, June.
    4. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-580, June.
    5. Kruse, Douglas L, 1992. "Profit Sharing and Productivity: Microeconomic Evidence from the United States," Economic Journal, Royal Economic Society, vol. 102(410), pages 24-36, January.
    6. Robert Gibbons & Lawrence F. Katz & Thomas Lemieux & Daniel Parent, 2005. "Comparative Advantage, Learning, and Sectoral Wage Determination," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 681-724, October.
    7. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-979, July.
    8. Douglas L. Kruse, 1993. "Profit Sharing: Does It Make a Difference?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ps, November.
    9. Abraham, Katharine G & Farber, Henry S, 1987. "Job Duration, Seniority, and Earnings," American Economic Review, American Economic Association, vol. 77(3), pages 278-297, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Damiani, Mirella & Ricci, Andrea, 2016. "Training, quality of management and firm level bargaining," MPRA Paper 72138, University Library of Munich, Germany.
    2. Kornelius Kraft & Julia Lang, 2013. "Profit Sharing and Training," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(6), pages 940-961, December.
    3. Gielen, A. C., 2007. "Performance Pay, Training and Labor Mobility," Other publications TiSEM 4e54354b-d7d3-4f97-a618-5, Tilburg University, School of Economics and Management.
    4. Naci Mocan & Erdal Tekin, 2011. "Obesity, Self-Esteem and Wages," NBER Chapters, in: Economic Aspects of Obesity, pages 349-380, National Bureau of Economic Research, Inc.
    5. Petr Petera & Jana Fibírová, 2015. "Basic Approaches to Profit-Sharing and Ideas for Utilization [Základní přístupy k "profit-sharingu" a náměty na další využití]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2015(3), pages 97-117.
    6. C Green & J S Heywood, 2007. "Does profit sharing increase training by reducing turnover?," Working Papers 589032, Lancaster University Management School, Economics Department.
    7. Curme, Michael & Stefanec, Noah, 2007. "Worker quality and labor market sorting," Economics Letters, Elsevier, vol. 96(2), pages 202-208, August.
    8. Damiani, Mirella & Ricci, Andrea, 2016. "Training, quality of management and firm level bargaining," MPRA Paper 72209, University Library of Munich, Germany.
    9. repec:lan:wpaper:3017 is not listed on IDEAS
    10. repec:lan:wpaper:2923 is not listed on IDEAS
    11. repec:lan:wpaper:2925 is not listed on IDEAS
    12. repec:lan:wpaper:3172 is not listed on IDEAS
    13. Mirella Damiani & Andrea Ricci, 2016. "Training, quality of management and firm level bargaining," Quaderni del Dipartimento di Economia, Finanza e Statistica 23/2016, Università di Perugia, Dipartimento Economia.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    2. Möller, Iris, 2000. "Produktivitätswirkung von Mitarbeiterbeteiligungen (Productivity effect of employee participation in asset formation)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 33(4), pages 565-582.
    3. Möller, Iris, 2000. "Produktivitätswirkung von Mitarbeiterbeteiligungen (Productivity effect of employee participation in asset formation)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 33(4), pages 565-582.
    4. Doucouliagos, Chris & Laroche, Patrice & Kruse, Douglas L. & Stanley, T. D., 2018. "Where Does Profit Sharing Work Best? A Meta-Analysis on the Role of Unions, Culture, and Values," IZA Discussion Papers 11617, Institute of Labor Economics (IZA).
    5. Sarah Brown & John G. Sessions, 2003. "Attitudes, Expectations and Sharing," LABOUR, CEIS, vol. 17(4), pages 543-569, December.
    6. James C. Sesil & Yu Peng Lin, 2011. "The Impact of Employee Stock Option Adoption and Incidence on Productivity: Evidence from U.S. Panel Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(3), pages 514-534, July.
    7. Woodcock Simon D, 2010. "Heterogeneity and Learning in Labor Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-69, September.
    8. Kuhn, Peter & Sweetman, Arthur, 1999. "Vulnerable Seniors: Unions, Tenure, and Wages Following Permanent Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 671-693, October.
    9. Dohmen, Thomas J., 2004. "Performance, seniority, and wages: formal salary systems and individual earnings profiles," Labour Economics, Elsevier, vol. 11(6), pages 741-763, December.
    10. Xin Jin, 2014. "The Signaling Role of Not Being Promoted: Theory and Evidence," Working Papers 0314, University of South Florida, Department of Economics.
    11. Paul Hek & Daniel Vuuren, 2011. "Are older workers overpaid? A literature review," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(4), pages 436-460, August.
    12. Daniel Parent, 2001. "Incentive Pay in the United States: Its Determinants and Its Effects," CIRANO Working Papers 2001s-04, CIRANO.
    13. Noélie Delahaie & Richard Duhautois, 2019. "Profit‐Sharing and Wages: An Empirical Analysis Using French Data between 2000 and 2007," British Journal of Industrial Relations, London School of Economics, vol. 57(1), pages 107-142, March.
    14. Takao Kato & Motohiro Morishima, 1995. "The Productivity Effects of Human Resource Management Practices: Evidence from New Japanese Panel Data," Economics Working Paper Archive wp_143, Levy Economics Institute.
    15. Takao Kato, 2003. "The Recent Transformation of Participatory Employment Practices in Japan," NBER Chapters, in: Labor Markets and Firm Benefit Policies in Japan and the United States, pages 39-80, National Bureau of Economic Research, Inc.
    16. Jin, Xin, 2014. "The Signaling Role of Note Being Promoted: Theory and Evidence," MPRA Paper 58484, University Library of Munich, Germany.
    17. Yao, Shujie, 1997. "Profit Sharing, Bonus Payment, and Productivity: A Case Study of Chinese State-Owned Enterprises," Journal of Comparative Economics, Elsevier, vol. 24(3), pages 281-296, June.
    18. Sullivan, Paul, 2010. "Empirical evidence on occupation and industry specific human capital," Labour Economics, Elsevier, vol. 17(3), pages 567-580, June.
    19. Geert Braam & Erik Poutsma, 2015. "Broad-Based Financial Participation Plans and Their Impact on Financial Performance: Evidence from a Dutch Longitudinal Panel," De Economist, Springer, vol. 163(2), pages 177-202, June.
    20. Kornelius Kraft & Julia Lang, 2016. "Just a Question of Selection? The Causal Effect of Profit Sharing on a Firm's Performance," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(3), pages 444-467, July.
    21. Gathmann, Christina & Schönberg, Uta, 2006. "How General Is Specific Human Capital?," IZA Discussion Papers 2485, Institute of Labor Economics (IZA).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:83:y:2004:i:1:p:37-42. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.