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The fixed wage puzzle: Why profit sharing is so hard to implement

  • Jerger, Jürgen
  • Michaelis, Jochen

Profit sharing arrangements Pareto-dominate fixed wage contracts, but are (far) less than ubiquitous. We account for this fixed wage puzzle by adopting a perspective of bounded rationality. Specifically, plausible share arrangements are not generally acceptable to both firms and unions.

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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 110 (2011)
Issue (Month): 2 (February)
Pages: 104-106

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Handle: RePEc:eee:ecolet:v:110:y:2011:i:2:p:104-106
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  7. Jerger, Jurgen & Michaelis, Jochen, 1999. " Profit Sharing, Capital Formation and the NAIRU," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(2), pages 257-75, June.
  8. Holmlund, B., 1988. "Profit Sharing, Wage Bargaining, And Unemployment," Papers 1988l, Uppsala - Working Paper Series.
  9. Maria Brouwer, 2005. "Managing Uncertainty through Profit Sharing Contracts from Medieval Italy to Silicon Valley," Journal of Management and Governance, Springer, vol. 9(3), pages 237-255, 09.
  10. Richard Watt, 2002. "Defending Expected Utility Theory: Comment," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 227-229, Spring.
  11. Erkki Koskela & Rune Stenbacka, 2006. "Flexible and Committed Profit Sharing with Wage Bargaining: Implications for Equilibrium Unemployment," Journal of Economics, Springer, vol. 87(2), pages 159-180, 03.
  12. Farber, Henry S, 1978. "Individual Preferences and Union Wage Determination: The Case of the United Mine Workers," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 923-42, October.
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