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Determinants of Profit Sharing in the Finnish Corporate Sector

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Author Info

  • Arranz-Aperte, Laura

    ()
    (Swedish School of Economics)

  • Heshmati, Almas

    ()
    (Sogang University)

Abstract

This study investigates the role of factors that determine individual employees’ and firms’ participation in profit sharing schemes. Using a large panel data of Finnish employees for the period 1996-2000 we analyse individual and workplace characteristics that make firms employ profit sharing schemes and workers susceptible of receiving profit sharing bonuses. In particular two links between profit sharing schemes and workers performance have been analysed. First, in looking at profit sharing as an incentive device the results show a positive link between firm size and monitoring costs. Second, we find that younger individuals with higher mean salary and capacity to bear risk are more susceptible to profit sharing schemes. The industrial sector in which the individual is employed is also an important determinant factor.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 776.

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Length: 28 pages
Date of creation: Apr 2003
Date of revision:
Publication status: published in: Indian Economic Review, 2004, 39 (1), 55-79
Handle: RePEc:iza:izadps:dp776

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Keywords: firm; profit sharing; panel data; individual;

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References

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  1. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  2. David Margolis & Kjell G, Salvanes, 2001. "Do Firms Really Share Rents with their Workers," Working Papers 2001-16, Centre de Recherche en Economie et Statistique.
  3. repec:fth:inseep:2001-16 is not listed on IDEAS
  4. Charles Brown, 1990. "Firms' Choice of Method of Pay," NBER Working Papers 3065, National Bureau of Economic Research, Inc.
  5. 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 Mathématique et Applications 92.45, Université Panthéon-Sorbonne (Paris 1).
  6. Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-91, September.
  7. FitzRoy, Felix R & Kraft, Korenelius, 1987. "Cooperation, Productivity, and Profit Sharing," The Quarterly Journal of Economics, MIT Press, vol. 102(1), pages 23-35, February.
  8. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  9. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  10. Bauer, Thomas K., 2003. "Flexible Workplace Practices and Labor Productivity," IZA Discussion Papers 700, Institute for the Study of Labor (IZA).
  11. Kölling, Arnd & Schnabel, Claus & Wagner, Joachim, 2002. "Establishment Age and Wages: Evidence from German Linked Employer-Employee Data," IZA Discussion Papers 679, Institute for the Study of Labor (IZA).
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Cited by:
  1. Ekholm, Bo-Göran & Wallin, Jan, 2004. "Strategic Priorities, Company Performance and Attitudes Towards Management Accounting Techniques: an Empirical Study," Working Papers 507, Hanken School of Economics.
  2. Forsman, Maria & Solitander, Nikodemus, 2004. "The Context and Diffusion of Knowledge in the Finnish Jewellery Industry - The role of The House of Fabergé," Working Papers 506, Hanken School of Economics.
  3. Ekholm, Bo-Göran & Wallin, Jan, 2003. "Shareholder/Stakeholder Value Management, Company Growth and Financial Performance: An Exploratory Study," Working Papers 493, Hanken School of Economics.
  4. Fougère, Martin, 2004. "Organizing (with) Thirdness. A Dialogic Understanding of Bicultural Interactions in Organizations," Working Papers 504, Hanken School of Economics.
  5. Usamah Fayez Al-Farhan, 2010. "A Detailed Decomposition of Changes in Wage Inequality in Reunified Post-transition Germany 1999-2006: Accounting for Sample Selection," SOEPpapers on Multidisciplinary Panel Data Research 269, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Fougère, Martin, 2004. "Finnish-French Fundamental Cultural Antagonisms in Organising," Working Papers 502, Hanken School of Economics.

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