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Does profit sharing reduce conflict with the boss? Evidence from Germany

  • John Heywood
  • Uwe Jirjahn
  • Georgi Tsertsvadze

This paper argues that, in general, profit sharing aligns the interests of workers and the firm and that this alignment reduces the extent of conflict between workers and management. This paper also argues that this general result will not carry over to the workers least able to respond to the alignment of interests with greater effort and that it will not apply to supervisors. After describing the German use of profit sharing, we use German data to show that for non-supervisory workers in excellent health, profit sharing reduces conflict but that for those who are not in excellent health and for supervisors, profit sharing does not reduce conflict. We also show that independent from profit sharing, conflict with the boss is greater for the aged and for those not in excellent health.

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Article provided by Taylor & Francis Journals in its journal International Economic Journal.

Volume (Year): 19 (2005)
Issue (Month): 2 ()
Pages: 235-250

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Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:235-250
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  1. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers 90-07, Rochester, Business - Managerial Economics Research Center.
  2. FitzRoy, Felix R & Kraft, Kornelius, 1986. "Profitability and Profit-Sharing," Journal of Industrial Economics, Wiley Blackwell, vol. 35(2), pages 113-30, December.
  3. Douglas Kruse & Joseph Blasi & Richard B. Freeman, 2004. "Monitoring colleagues at work: profit-sharing, employee ownership, broad-based stock options and workplace performance in the United States," LSE Research Online Documents on Economics 19943, London School of Economics and Political Science, LSE Library.
  4. Laffont, Jean-Jacques, 1990. "Analysis of Hidden Gaming in a Three-Level Hierarchy," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(2), pages 301-24, Fall.
  5. Douglas L. Kruse, 1993. "Profit Sharing: Does It Make a Difference?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ps, November.
  6. Richard B. Freeman & Edward P. Lazear, 1994. "An Economic Analysis of Works Councils," NBER Working Papers 4918, National Bureau of Economic Research, Inc.
  7. Knez, Marc & Simester, Duncan, 2001. "Firm-Wide Incentives and Mutual Monitoring at Continental Airlines," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 743-72, October.
  8. John S. Heywood & Uwe Jirjahn, 2002. "Payment schemes and gender in Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(1), pages 44-64, October.
  9. John S. Heywood & Uwe Jirjahn & Georgi Tsertsvadze, 2005. "Getting along with Colleagues - Does Profit Sharing Help or Hurt?," Kyklos, Wiley Blackwell, vol. 58(4), pages 557-573, November.
  10. Heywood, John S & Hubler, Olaf & Jirjahn, Uwe, 1998. "Variable Payment Schemes and Industrial Relations: Evidence from Germany," Kyklos, Wiley Blackwell, vol. 51(2), pages 237-57.
  11. Rotemberg, Julio J, 1994. "Human Relations in the Workplace," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 684-717, August.
  12. Prendergast, Canice & Topel, Robert, 1993. "Discretion and bias in performance evaluation," European Economic Review, Elsevier, vol. 37(2-3), pages 355-365, April.
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