Profit Sharing and Unemployment: An Approach with Bargaining and Efficiency-Wage Effects
We offer a unified framework to analyse the determination of employment, employee effort, wages, and profit sharing when firms face stochastic revenue shocks. We apply a generalized Nash bargaining solution, which extends the wage bargaining literature by incorporating efficiency-wage considerations, profit sharing, and exogenous capital structure. The profit-sharing instrument is demonstrated to have positive effort-enhancing and wage-moderating effects, which exactly offset the negative dilution effect in equilibrium. We show that the introduction of profit sharing decreases equilibrium unemployment if the benefit replacement ratio is high enough, whereas the reverse holds if the benefit replacement ratio is low.
Volume (Year): 160 (2004)
Issue (Month): 3 (September)
|Contact details of provider:|| Web page: https://www.mohr.de/jite|
|Order Information:|| Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Erkki Koskela & Ronnie Schöb & Hans-Werner Sinn, 1998.
"Pollution, Factor Taxation and Unemployment,"
International Tax and Public Finance,
Springer;International Institute of Public Finance, vol. 5(3), pages 379-396, July.
- Koskela, Erkki & Schöb, Ronnie & Sinn, Hans-Werner, 1998. "Pollution, Factor Taxation and Unemployment," Munich Reprints in Economics 19493, University of Munich, Department of Economics.
- Erkki Koskela & Ronnie SchÃ¶b & Hans-Werner Sinn, 1998. "Pollution, Factor Taxation and Unemployment," CESifo Working Paper Series 151, CESifo Group Munich.
- Jerger, Jurgen & Michaelis, Jochen, 1999. " Profit Sharing, Capital Formation and the NAIRU," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(2), pages 257-275, June.
- Lindbeck, Assar & Snower, Dennis J., 1991. "Interactions between the efficiency wage and insider-outsider theories," Economics Letters, Elsevier, vol. 37(2), pages 193-196, October.
- Lindbeck, A. & Snower, D.J., 1990. "Interactions between the Efficiency Wage and Insider- Outsider Theories," Papers 474, Stockholm - International Economic Studies.
- Sanfey, Peter J., 1993. "On the interaction between efficiency wages and union-firm bargaining models," Economics Letters, Elsevier, vol. 41(3), pages 319-324.
- Wadhwani, Sushil & Wall, Martin, 1990. "The Effects of Profit-Sharing on Employment, Wages, Stock Returns and Productivity: Evidence from UK Micro-data," Economic Journal, Royal Economic Society, vol. 100(399), pages 1-17, March.
- Wadhwani, S. & Wall, M., 1988. "The Effects Of Profit-Sharing On Employment, Wages, Stock Returns And Productivity: Evidence From Uk Micro-Data," Papers 311, London School of Economics - Centre for Labour Economics.
- Garino, Gaia & Martin, Christopher, 2000. "Efficiency wages and union-firm bargaining," Economics Letters, Elsevier, vol. 69(2), pages 181-185, November.
- Christopher Martin, "undated". "Efficiency Wages and Union-Firm Bargaining," Economics and Finance Discussion Papers 97-10, Economics and Finance Section, School of Social Sciences, Brunel University.
- Bulkley, George & Myles, Gareth D, 1996. "Trade Unions, Efficiency Wages, and Shirking," Oxford Economic Papers, Oxford University Press, vol. 48(1), pages 75-88, January.
- Cahue, P. & Dormont, B., 1993. "Profit-Sharing: Does It Increase Productivity and Employment?," Papers 9307, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
- Dasgupta, Sudipto & Sengupta, Kunal, 1993. "Sunk Investment, Bargaining and Choice of Capital Structure," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(1), pages 203-220, February. Full references (including those not matched with items on IDEAS)