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Profit Sharing and Gainsharing: A Review of Theory, Incidence, and Effects

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  • Derek C. Jones

    (The Jerome Levy Economics Institute)

  • Takao Kato

    (The Jerome Levy Economics Institute)

  • Jeffrey Pliskin

    (The Jerome Levy Economics Institute)

Abstract

The slowdown in productivity growth since the 1970s has led to increased interest in alternative compensation schemes—such as profit sharing and gainsharing—that might raise worker productivity and reduce turnover. In this working paper, Jones, Kato, and Pliskin summarize the rise in popularity of profit sharing (PS) and gainsharing (GS) plans; review existing theoretical and empirical work on PS and GS; and highlight findings that relate the effectiveness of such programs at raising productivity and enhancing employment stability. They also note that some existing studies contain some econometric problems relating to plan and model variables; there are measurement problems as well. Their paper primarily focuses on PS plans.

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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 9903010.

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Length: 32 pages
Date of creation: 11 Mar 1999
Date of revision:
Handle: RePEc:wpa:wuwpma:9903010

Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 32; figures: included
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Web page: http://128.118.178.162

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References

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  1. Takatoshi Ito, 1991. "The Japanese Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262090295, January.
  2. Blanchflower, David G & Oswald, Andrew J, 1987. "Profit Sharing--Can It Work?," Oxford Economic Papers, Oxford University Press, vol. 39(1), pages 1-19, March.
  3. Kumbhakar, Subal C. & Dunbar, Amy E., 1993. "The elusive ESOP--productivity link : evidence from U.S. firm-level data," Journal of Public Economics, Elsevier, vol. 52(2), pages 273-283, September.
  4. Tracy, Joseph, 1986. "Unions and the share economy," Journal of Comparative Economics, Elsevier, vol. 10(4), pages 433-437, December.
  5. Freeman, Richard B. & Weitzman, Martin L., 1987. "Bonuses and employment in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 1(2), pages 168-194, June.
  6. 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.
  7. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
  8. Douglas L. Kruse, 1991. "Profit-sharing and employment variability: Microeconomic evidence on the Weitzman theory," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 44(3), pages 437-453, April.
  9. Jensen, Michael C & Meckling, William H, 1979. "Rights and Production Functions: An Application to Labor-managed Firms and Codetermination," The Journal of Business, University of Chicago Press, vol. 52(4), pages 469-506, October.
  10. Roger T. Kaufman, 1992. "The effects of IMPROSHARE on productivity," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 45(2), pages 311-322, January.
  11. Brunello, G., 1989. "Bonuses, Wages And Performance In Japan: Evidence From Micro Data," Papers 359, London School of Economics - Centre for Labour Economics.
  12. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers 90-07, Rochester, Business - Managerial Economics Research Center.
  13. Edward P. Lazear, 1991. "Labor Economics and the Psychology of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 89-110, Spring.
  14. S Estrin & D Jones, 1992. "The Determinants of Investment in Employee Owned Firms: Evidence from France," CEP Discussion Papers dp0087, Centre for Economic Performance, LSE.
  15. FitzRoy, Felix R & Kraft, Kornelius, 1986. "Profitability and Profit-Sharing," Journal of Industrial Economics, Wiley Blackwell, vol. 35(2), pages 113-30, December.
  16. Derek C. Jones & Takao Kato, 1993. "The scope, nature, and effects of employee stock ownership plans in Japan," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(2), pages 352-367, January.
  17. James R. Chelius & Robert S. Smith, 1990. "Profit sharing and employment stability," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(3), pages 256-273, February.
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Cited by:
  1. Douglas L. Kruse & Joseph R. Blasi & Richard B. Freeman, 2012. "Does Linking Worker Pay to Firm Performance Help the Best Firms Do Even Better?," NBER Working Papers 17745, National Bureau of Economic Research, Inc.
  2. Takao Kato & Ju HO Lee & Kang-sung Lee & Jang-soo Ryu, 2005. "Employee participation and involvement in korea: evidence from a new survey and field research," International Economic Journal, Taylor & Francis Journals, vol. 19(2), pages 251-281.
  3. Joseph R. Blasi & Richard B. Freeman & Christopher Mackin & Douglas L. Kruse, 2010. "Creating a Bigger Pie? The Effects of Employee Ownership, Profit Sharing, and Stock Options on Workplace Performance," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 139-165 National Bureau of Economic Research, Inc.
  4. Takao Kato, . "Cooperate to Compete, Employee Participation and Productivity: Evidence from a New Survey of Japanese Firms," Economics Public Policy Brief Archive ppb_19, Levy Economics Institute, The.
  5. Jones, Derek C. & Kalmi, Panu & Mäkinen, Mikko, 2004. "The Determinants of Stock Option Compensation: Evidence from Finland," Discussion Papers 957, The Research Institute of the Finnish Economy.
  6. Kato, Takao & Lee, Ju Ho & Ryu, Jang-Soo, 2010. "The Productivity Effects of Profit Sharing, Employee Ownership, Stock Option and Team Incentive Plans: Evidence from Korean Panel Data," IZA Discussion Papers 5111, Institute for the Study of Labor (IZA).

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