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Profit-sharing and employment variability: Microeconomic evidence on the Weitzman theory

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  • Douglas L. Kruse
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    Abstract

    This study tests an important implication of Weitzman's profit-sharing theory-the prediction that profit-sharing firms will have more stable employment than fixed-wage firms-using panel data on 2,976 publicly traded companies for the years 1971-85. Profit-sharing manufacturing firms are found to have had smaller employment decreases than other manufacturing firms during business downturns: when the unemployment rate increased by one point, manufacturing firms in which all employees participated in a profit-sharing pension plan had a 2.0% decrease in employment, compared to a 3.1% decrease for non-profit-sharing manufacturing firms. No significant differences in employment stability were found, however, between profit-sharing and non-profit-sharing firms in the non-manufacturing sector. (Abstract courtesy JSTOR.)

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    Bibliographic Info

    Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

    Volume (Year): 44 (1991)
    Issue (Month): 3 (April)
    Pages: 437-453

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    Handle: RePEc:ilr:articl:v:44:y:1991:i:3:p:437-453

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    Cited by:
    1. Ammon, Norbert, 1998. "Why Hedge? - A Critical Review of Theory and Empirical Evidence -," ZEW Discussion Papers 98-18, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Cecilia Navarra, 2013. "How do worker cooperatives stabilize employment? The role of profit reinvestment into locked assets," Working Papers 1307, University of Namur, Department of Economics.
    3. Derek C. Jones & Takao Kato & Jeffrey Pliskin, 1994. "Profit Sharing and Gainsharing: A Review of Theory, Incidence, and Effects," Economics Working Paper Archive wp_125, Levy Economics Institute, The.
    4. C Green & J S Heywood, 2007. "Does profit sharing increase training by reducing turnover?," Working Papers 589032, Lancaster University Management School, Economics Department.

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