Employee Stock Ownership vs. Profit Sharing
AbstractThe idea that profit sharing increases employment has been widely tested, but the theoretical basis for the claim is weak and the empirical results are ambiguous. This paper shows that employee stock ownership based on individually-held stakes avoids the problems of traditional profit sharing. Employee stock ownership shifts employment to the efficient level by either raising employment from an initial state of underemployment or decreasing it from an initial state of overemployment. Since the effect on employment is not unidirectional, empirical tests need to differentiate between traditional profit sharing and employee stock ownership and to condition on the initial state of employment.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Claremont Colleges in its series Claremont Colleges Working Papers with number 2000-28.
Date of creation:
Date of revision:
Contact details of provider:
Postal: 500 E. 9th Street, Claremont, CA 91711
Phone: (909) 607-3041
Fax: (909) 621-8249
Web page: http://www.claremontmckenna.edu/rdschool/papers/
More information through EDIRC
profit sharing; employee ownership; ESOPs; collective bargaining;
Find related papers by JEL classification:
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
- P13 - Economic Systems - - Capitalist Systems - - - Cooperative Enterprises
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrew K.G. Hildreth and Andrew J. Oswald, .
"Rent-Sharing and Wages: Evidence from Company and Establishment Panels,"
Economics Discussion Papers
425, University of Essex, Department of Economics.
- Hildreth, Andrew K G & Oswald, Andrew J, 1997. "Rent-Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 318-37, April.
- Hilderth, A.K. & Oswald, A.J., 1993. "Rent-Sharing and Wages: Evidence form Company and Establishment Panels," Economics Series Working Papers 99154, University of Oxford, Department of Economics.
- Bell, Linda A & Neumark, David, 1993. "Lump-Sum Payments and Profit-Sharing Plans in the Union Sector of the United States Economy," Economic Journal, Royal Economic Society, vol. 103(418), pages 602-19, May.
- Svejnar, Jan, 1986.
"Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry,"
Econometric Society, vol. 54(5), pages 1055-78, September.
- Svejnar, J., 1984. "Bargaining power, fear of disagreement and wage settlements: theory and evidence from U.S. industry," CORE Discussion Papers 1984037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Wadhwani, S. & Wall, M., 1988.
"The Effects Of Profit-Sharing On Employment, Wages, Stock Returns And Productivity: Evidence From Uk Micro-Data,"
311, London School of Economics - Centre for Labour Economics.
- Wadhwani, Sushil & Wall, Martin, 1990. "The Effects of Profit-Sharing on Employment, Wages, Stock Returns and Productivity: Evidence from UK Micro-data," Economic Journal, Royal Economic Society, vol. 100(399), pages 1-17, March.
- Andrew Oswald, 1984.
"Efficient Contracts are on the Labour Demand Curve: Theory and Facts,"
555, Princeton University, Department of Economics, Industrial Relations Section..
- Oswald, A. J., 1995. "Efficient contracts are on the labour demand curve: Theory and facts," Labour Economics, Elsevier, vol. 2(1), pages 102-102, March.
- Oswald, Andrew J., 1993. "Efficient contracts are on the labour demand curve : Theory and facts," Labour Economics, Elsevier, vol. 1(1), pages 85-113, June.
- Alexander, Carol & W Ledermann, 1994.
"Are Nash bargaining wage agreements unique: an investigation into bargaining sets for firm-union negotiations,"
Discussion Papers in Economics
12/94, Department of Economics, University of Sussex.
- Alexander, C O & Ledermann, W, 1996. "Are Nash Bargaining Wage Agreements Unique? An Investigation into Bargaining Sets for Firm-Union Negotiations," Oxford Economic Papers, Oxford University Press, vol. 48(2), pages 242-53, April.
- Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-93.
- Carruth, Alan A & Oswald, Andrew J, 1987. "On Union Preferences and Labour Market Models: Insiders and Outsi ders," Economic Journal, Royal Economic Society, vol. 97(386), pages 431-45, June.
- Weitzman, Martin L, 1987. "Steady State Unemployment under Profit Sharing," Economic Journal, Royal Economic Society, vol. 97(385), pages 86-105, March.
- Martin L. Weitzman, 1984.
"The Simple Macroeconomics of Profit Sharing,"
357, Massachusetts Institute of Technology (MIT), Department of Economics.
- Levine, David, 1987. "Efficiency wages in Weitzman's share economy," Economics Letters, Elsevier, vol. 23(3), pages 245-249.
- 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.
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
- Cahuc, P. & Dormont, B., 1992.
"Profit-Sharing: Does It Increase Productivity and Employment? A Theoretical Model and Empirical Evidence of French Micro Data,"
Papiers d'Economie MathÃÂ©matique et Applications
92.45, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Cahuc, Pierre & Dormont, Brigitte, 1997. "Profit-sharing: Does it increase productivity and employment? A theoretical model and empirical evidence on French micro data," Labour Economics, Elsevier, vol. 4(3), pages 293-319, September.
- Ognedal, Tone, 1992. "The effects of union owned shares on the outcome of wage bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 18(2), pages 185-200, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.