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Does profit sharing increase training by reducing turnover?

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Author Info
John S Heywood
Colin Green

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Abstract

We test the theoretical prediction that profit sharing reduces worker separations and by doing so increases the incidence of training. Using individual level UK data, we confirm that profit sharing is a robust determinant of lower separation rates and of greater training incidence. Critically, we cannot confirm the predicted link between separations and training. Instead, the evidence supports alternative theories suggesting a direct link between profit sharing and training. Our results suggest that profit sharing changes employer-worker relations in a way that leads to greater formal and informal investment in worker skills but that this is independent of its influence on reducing separations.

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Paper provided by Lancaster University Management School, Economics Department in its series Working Papers with number 005113.

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Date of creation: 2007
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Handle: RePEc:lan:wpaper:005113

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Keywords: Profit shares; Performance pay; training; turnover;

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    Other versions:
  22. W. Kip Viscusi & Joni Hersch, 2001. "Cigarette Smokers As Job Risk Takers," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 269-280, May. [Downloadable!] (restricted)
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  1. John S Heywood & Colin Green, 2008. "Profit Sharing and the Quality of Relations with the Boss," Working Papers 005698, Lancaster University Management School, Economics Department. [Downloadable!]
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