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Lump-Sums, Profit Sharing, and the Labor Costs in the Union Sector


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  • Linda A. Bell
  • David Neumark


This paper documents the increase in the use of lump-sum payments and profit sharing plans in union contracts in the 1980s, and evaluates the extent to which these innovations may have contributed to moderation in the growth of labor costs, and increased pay flexibility. We find evidence that lump-sum and profit sharing arrangements reduced labor cost growth at both the aggregate and firm level. But the evidence linking these plans to labor cost flexibility is mixed; although the evidence suggests that profit sharing plans may be associated with greater flexibility at the firm level, there is no evidence that lump-sum plans increase flexibility at either the firm or aggregate level.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3630.

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Date of creation: Feb 1991
Date of revision:
Publication status: published as Linda A. Bell and David Neumark. "Lump-sum Payments and Profit-sharing Plans in the Union Sector of the United States Economy" The Economic Journal, Vol. 103, No. 418 (May, 1993), pp. 602-619
Handle: RePEc:nbr:nberwo:3630

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Cited by:
  1. David Neumark & Jonathan S. Leonard, 1992. "Inflation Expectations and the Structural Shift in Aggregate Labor-Cost Determination in the 1980s," NBER Working Papers 4018, National Bureau of Economic Research, Inc.
  2. David Neumark, 1992. "Are Rising Wage Profiles a Forced-Saving Mechanism?," NBER Working Papers 4213, National Bureau of Economic Research, Inc.


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