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Profit sharing and relative consumption

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  • Goerke, Laszlo

Abstract

Mandatory profit sharing can represent a Pareto-improvement if labour supply is excessive due to relative consumption effects. Profit sharing reduces wages. If the rise in profit income keeps total income constant, there will only be a Pareto-improving substitution effect.

Suggested Citation

  • Goerke, Laszlo, 2013. "Profit sharing and relative consumption," Economics Letters, Elsevier, vol. 118(1), pages 167-169.
    • Handle: RePEc:eee:ecolet:v:118:y:2013:i:1:p:167-169
    DOI: 10.1016/j.econlet.2012.10.012
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    References listed on IDEAS

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    Cited by:

    1. Bilancini, Ennio & Boncinelli, Leonardo, 2019. "Wage inequality, labor income taxes, and the notion of social status," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 13, pages 1-35.

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    More about this item

    Keywords

    Labour supply; Profit sharing; Relative consumption; Status concerns;
    All these keywords.

    JEL classification:

    • D - Microeconomics
    • J - Labor and Demographic Economics
    • J - Labor and Demographic Economics

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